THE TEM­PER­A­TURE IS RIS­ING ON EMIS­SIONS

NZ Business - - FROM THE EDITOR -

Loom­ing global risks as­so­ci­ated with our chang­ing cli­mate are pre­dicted to raise the fre­quency and in­ten­sity of ris­ing tem­per­a­tures, storm surges and other weather events. Here In­sti­tute of Direc­tors chief ex­ec­u­tive Kirsten Pat­ter­son ad­dresses the im­pli­ca­tions of cli­mate change pres­sures on gover­nance.

Loom­ing global risks as­so­ci­ated with our chang­ing cli­mate are pre­dicted to raise the fre­quency and in­ten­sity of ris­ing tem­per­a­tures, storm surges and other weather events. Here In­sti­tute of Direc­tors chief ex­ec­u­tive Kirsten Pat­ter­son ad­dresses the im­pli­ca­tions of cli­mate change pres­sures on gover­nance.

If you’re a ten­nis fan, you would have seen play­ers at this year’s Aus­tralian Open in Mel­bourne stag­ger­ing around barely able to cope with the 40- de­gree heat. Across the north­ern hemi­sphere global warm­ing caused record- break­ing heat waves, for­est fires, crop fail­ures, and shut down nu­clear power plants as river wa­ter used for cool­ing was too warm.

One day in early Jan­uary, Syd­ney was the hottest place on earth when tem­per­a­tures soared to 47.3 de­grees. Some coun­tries are pre­dicted to turn to desert as rain­fall pat­terns change. Other coun­tries will con­front dev­as­tat­ing flood­ing and some Pa­cific Is­lands will dis­ap­pear un­der sea. Close to home, tem­per­a­tures are ris­ing too.

As the sea warms and the po­lar ice caps thaw, there will be more coastal storm surges in New Zealand’s low ly­ing ar­eas, chang­ing re­gional weather and warm­ing tem­per­a­tures. As ris­ing tem­per­a­tures make some coun­tries too hot to bear, more peo­ple may view New Zealand as a par­adise they want to live in.

As a coun­try we are com­mit­ted to the Paris Agree­ment on Cli­mate Change, to limit global warm­ing to well below two de­grees above pre-in­dus­trial lev­els, to the United Na­tions Sus­tain­able De­vel­op­ment Goals, and an Emis­sions Trad­ing Scheme.

A pro­posed Zero Car­bon Bill from the Labour-led Coali­tion Govern­ment is a sig­nif­i­cant new pol­icy that’s go­ing to have sub­stan­tial im­pact on your busi­nesses as we move to a low-car­bon econ­omy.

The Bill will es­tab­lish a Cli­mate Change Com­mis­sion to be a strate­gic leader with ad­vi­sory and mon­i­tor­ing func­tions. It will need ex­pert and ex­pe­ri­enced peo­ple able to over­see qual­ity anal­y­sis. Other coun­tries in­clud­ing Aus­tralia, United King­dom, Den­mark, Fin­land and Ire­land have es­tab­lished sim­i­lar agen­cies.

Even if the world can re­duce green­house gases, New Zealand will still be af­fected by cli­mate change im­pacts.

We know from our di­rec­tor sen­ti­ment sur­vey last year that 69 per­cent of direc­tors think en­vi­ron­men­tal and so­cial is­sues are im­por­tant to their or­gan­i­sa­tions. A quar­ter of boards (26 per­cent) said they were en­gaged and proac­tive on cli­mate change risks and prac­tices. That means in 2017, 74 per­cent of boards were yet to take any mean­ing­ful ac­tion.

Pro­gres­sive and for­ward-think­ing lead­ers will need to be proac­tive about cre­at­ing re­silience in their or­gan­i­sa­tions as cli­mate pres­sures emerge, and govern­ment ramps up reg­u­la­tions. In July this year 60 New Zealand chief ex­ec­u­tives from some of New Zealand’s largest com­pa­nies formed the Cli­mate Lead­ers Coali­tion to help our coun­try move to lower car­bon emis­sions.

For you, mov­ing to re­duce cli­mate change risks is im­por­tant to en­sure your com­mu­nity and busi­ness are sus­tain­able, re­main com­pet­i­tive and re­tain the li­cence your cus­tomers and so­ci­ety give you to op­er­ate.

If you are a leader or you set the strate­gic di­rec­tion of your or­gan­i­sa­tion, in­spir­ing ac­tion now on cli­mate change makes good busi­ness sense. There’s a sil­ver lin­ing in ev­ery cloud, and some peo­ple will see op­por­tu­ni­ties. Car­bonzero soda any­one?

While im­bib­ing said car­bon zero bev­er­age direc­tors can con­sider cli­mate change gover­nance risks and op­por­tu­ni­ties, and what re­port­ing frame­works are most ap­pro­pri­ate for your or­gan­i­sa­tion.

To mit­i­gate or adapt to risks as­so­ci­ated with cli­mate change, busi­ness lead­ers should cal­cu­late their re­sponse to ma­te­rial and fi­nan­cial risks and po­ten­tial li­a­bil­i­ties. Con­sider risks to prop­erty, sup­ply chains, stake­hold­ers, share­hold­ers, and im­pli­ca­tions on your in­sur­ances.

The NZX Cor­po­rate Gover­nance Code now asks listed com­pa­nies to dis­close non-fi­nan­cial in­for­ma­tion re­gard­ing en­vi­ron­men­tal, eco­nomic and so­cial sus­tain­abil­ity risks. Over­seas, cli­mate risk is be­com­ing more in­te­grated into fi­nan­cial re­port­ing. Many coun­tries re­quire some or­gan­i­sa­tions, par­tic­u­larly large or listed firms, to make cli­mate re­lated dis­clo­sures.

Busi­ness plays a crit­i­cal role in tran­si­tion­ing to a sus­tain­able world. The IoD sub­mit­ted to the govern­ment sup­port­ing the in­tent of a Zero Car­bon Bill to es­tab­lish a long-term ap­proach to cli­mate change in New Zealand and we en­cour­age boards to take the lead in ad­dress­ing cli­mate change.

As we move to a new low-car­bon econ­omy in line with our in­ter­na­tional com­mit­ments, boards need to think strate­gi­cally and de­velop plans that in­te­grate a fu­ture with lower emis­sions. If cli­mate change is not on your board agenda, it should be. IoD is a non-par­ti­san vol­un­tary mem­ber­ship or­gan­i­sa­tion com­mit­ted to driv­ing ex­cel­lence in gover­nance. It rep­re­sents more than 8,700 mem­bers drawn from listed is­suers, large pri­vate or­gan­i­sa­tions, small and medium en­ter­prises, state sec­tor or­gan­i­sa­tions, not-for-prof­its and char­i­ties.

Kirsten Pat­ter­son.

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