Net-Zero New Zealand: What will it take?
The target is ambitious and essential, requiring transformational change across every industry, sector and business in New Zealand.
At the end of last year, KPMG released the inaugural global Net Zero Readiness Index. Considering 103 indicators split between national preparedness and sector readiness, it ranks New Zealand as ninth out of 32 countries for our ability to achieve net-zero carbon emissions.
Where we stand
It is exciting to see New Zealand rank highly and it’s a tribute to the hard work of some of our core sectors. It reflects our unique sense of kaitiakitanga, our pride in the country’s whenua, biodiversity and culture.
This has been coupled with world-first legislation, including mandating the use of Taskforce on Climate-Related Financial Disclosures recommendations for certain companies, and the Carbon Neutral Government Programme.
This global KPMG report follows the May 2021 release of the New Zealand Climate Change Commission’s report ‘Ināia tonu nei: a low emissions future for Aotearoa’, which concluded that there are technically achievable, economically affordable and socially acceptable pathways for Aotearoa to achieve a climate-resilient and low emissions future.
There is certainly cause to celebrate this progress and our efforts so far, but there is a balance to be struck. A balance that allows Kiwis to acknowledge the achievements of the last decade but does not encourage us to take our foot off the gas (metaphorically).
KPMG’s New Zealand-based Global Head of Agribusiness, Ian Proudfoot, calls the journey to net zero “a marathon,” with this report marking “the timing split at the end of the first kilometre.” He also points out that net zero still falls short of creating positive impact. There is nuance to the findings that must be taken into account.
We are one of only nine countries in the Index to have made net-zero commitments binding under national law. Political will is a critical factor, but this commitment does not correlate with our relative delivery capability across the five highest-emitting sectors. Here we come 14th, behind Australia which had no official net-zero target at the time of the report.
Agribusiness
Our overall Index ranking was driven primarily by our agricultural sector’s readiness, with a comparatively high number of clean tech companies and low levels of food loss. Initiatives like ‘He Waka Eke Noa’ are positioning New Zealand to be a global leader in this space, but even in this sector there is considerable work to be done to counter the methane emissions of the dairy industry. In the other four high-emissions sectors evaluated, we do not rank in the top five.
Transport
New Zealand was placed at 23 out of 25 for our transport sector. This may not come as a surprise to those who know that transport makes up 47% of New Zealand’s carbon dioxide emissions and is our fastest growing source of greenhouse gas emissions. But work is in motion to reduce our emissions, albeit with tension between the pace of change needed and the time needed for New Zealanders and organisations to make significant, long-term changes in how they get around. It’s a challenge New Zealand can’t shy away from.
The road forward
Net zero is both ambitious and essential. It requires transformational change across every industry, sector and business. Setting the target is the first step and needs to be followed by detailed plans and support mechanisms from government. Mandatory business reporting, the power of the financial markets, public support for climate action and collaboration at all levels are other key ingredients that we must harness to reach the finish line.
The Government’s delayed Emissions Reduction Plan, due in just a few months, must outline targets alongside the pathways to reach them. In the last year alone, we have seen floods across the country. Record temperatures are almost the norm. There is no doubt that this is an emergency – 76% of New Zealanders don’t feel that business is doing enough to reduce its environmental impact.
New Zealanders now must hold each other accountable but, more importantly, support each other in this transformation. I’m optimistic that organisations are committed, innovative and likely to succeed in transitioning us to a net-zero future.
What they need is capital, energy and other infrastructure, sensible policy, and strategic support from every facet of the economy. Organisations need to have honest, meaningful conversations about their impact in order to move towards a sustainable, resilient and inclusive Aotearoa.
Understanding the impact of climate is critical for our director community. That’s why KPMG is a Chapter Zero New Zealand foundation partner, supporting them to do just that. We are drawing on our expertise to measure new metrics, develop new reports that look beyond pure financials, architect roadmaps to carbon neutral operations, and undertake reforms that put New Zealand’s environment and communities at the centre.
This article is featured in the Boardroom Magazine Autumn 2022 issue.
