The En­vi­ron­men­tal Op­por­tu­nity

Element - - The Blue Economy - By Jackie Robert­son, as­sur­ance part­ner, Deloitte New Zealand

What would a sus­tain­able New Zealand look like? Most would agree it would in­clude a well-ed­u­cated and healthy pop­u­la­tion, a suc­cess­ful econ­omy, vi­brant com­mu­ni­ties and a healthy nat­u­ral en­vi­ron­ment.

But while these as­pects of our lives are de­pen­dent upon each other, gov­ern­ments mainly fo­cus on quan­ti­ta­tive eco­nomic sta­tis­tics such as GDP growth, com­mu­ni­ties mainly fo­cus on their cur­rent needs and cor­po­rates mainly fo­cus on short-to-medium-term prof­its. Few fo­cus on the health of the ecosys­tems that all this de­pends on. New Zealand, more than most, is de­pen­dent on look­ing af­ter its nat­u­ral en­vi­ron­ment for its long-term suc­cess.

There are en­cour­ag­ing signs of change. There is grow­ing ev­i­dence sug­gest­ing busi­nesses that proac­tively man­age their im­pacts on so­ci­ety and the en­vi­ron­ment achieve broader ben­e­fits and com­pet­i­tive ad­van­tages than just brand pro­tec­tion and risk man­age­ment. These in­clude: at­trac­tion of tal­ented staff; se­cur­ing ac­cess to re­sources; an­tic­i­pa­tion or avoid­ance of reg­u­la­tion; and iden­ti­fy­ing new busi­ness op­por­tu­ni­ties.

Com­pa­nies that have this holis­tic view of the en­vi­ron­ment and the so­ci­ety in which they op­er­ate, and use it to de­ter­mine busi­ness strat­egy, achieve bet­ter longterm re­turns for share­hold­ers.

In­vestors also recog­nise the im­por­tance of hav­ing trans­par­ent, fo­cused and qual­ity in­for­ma­tion about how com­pa­nies man­age the risks and op­por­tu­ni­ties as­so­ci­ated with broader en­vi­ron­men­tal and so­cial im­pacts.

Un­til re­cently this in­for­ma­tion has only been pro­vided on a vol­un­tary ba­sis but cap­i­tal mar­kets, in­clud­ing those in places like South Africa, Aus­tralia and the Euro­pean Union, have now started to ask for as­pects of this in­for­ma­tion to be dis­closed as part of the list­ing rules.

As an ac­coun­tant I have al­ways liked the fun­da­men­tal prin­ci­ple of ‘what gets mea­sured gets man­aged’.

Bring­ing in more manda­tory re­port­ing of how com­pa­nies are man­ag­ing their sus­tain­abil­ity is­sues, and how they are per­form­ing in these ar­eas, is a step in the right di­rec­tion. The chal­lenge will be in un­der­stand­ing what sus­tain­abil­ity im­pacts a com­pany ac­tu­ally has and de­vel­op­ing mean­ing­ful mea­sures of cor­po­rate per­for­mance. Boards need to get in­volved to en­sure a com­pany’s sus­tain­abil­ity phi­los­o­phy is in­te­grated into its core strat­egy or the real ben­e­fits will not be achieved.

At na­tional lev­els, the con­cept of us­ing GDP as the main in­di­ca­tor for na­tional pros­per­ity is be­ing chal­lenged, with nu­mer­ous al­ter­na­tive mea­sure­ments and in­dices, in­clud­ing “Pros­per­ity with­out Growth” (UK), “Mis­mea­sur­ing Our Lives – Why GDP Doesn’t Add Up” (France), the So­cial Progress In­dex (so­cial­pro­gres­sim­per­a­tive.org) and oth­ers be­ing pro­mul­gated.

These all re­flect the re­al­ity that eco­nomic growth is only a means to an end and that we can­not con­tinue to over­stretch our nat­u­ral lim­its or live safely or pros­per­ously in highly un­equal so­ci­eties.

Closer to home the Trea­sury has es­tab­lished its Liv­ing Stan­dards Frame­work and The Min­istry for the En­vi­ron­ment, to­gether with Sta­tis­tics NZ, have re­leased their pro­posed Frame­work for En­vi­ron­men­tal Re­port­ing.

In an­swer­ing the ques­tion “How will we get to a sus­tain­able 2050?” we need good-qual­ity in­for­ma­tion about where we are now, agree­ment on na­tional pri­or­i­ties, to work to­gether col­lab­o­ra­tively and mea­sure our progress on the road to achiev­ing our vi­sion for the fu­ture.

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