A group of 60 CEOs from companies including Air New Zealand, Spark, Fonterra and Vector have formed the Climate Leaders Coalition, with the purpose of reducing the country’s emissions. But what does this actually mean? Jihee Junn talks to the coalition convenor, Z Energy CEO Mike Bennetts
In 2016, New Zealand ratified the landmark Paris Agreement, joining dozens of other nations in a common goal to keep global temperature rises well below two degrees. Today, executives from New Zealand’s biggest companies have committed to put their own efforts behind the agreement, with the launch of the Climate Leaders Coalition.
The coalition comprises 60 CEOs who have signed a joint statement committing their companies to take action to help New Zealand to transition to a low emissions economy. These companies – which are said to make up nearly 50% of New Zealand’s emissions – include some of the biggest names in local business, such as Fonterra, Spark, Air New Zealand, Z Energy, Watercare, Lion, Countdown and Meridian.
In addition to outlining its support of the Paris Agreement and the introduction of a climate commission and carbon budgets enshrined in law, the coalition’s joint statement pledges three key actions:
- Measure greenhouse gas emissions and publicly report on them
- Set a public emissions reduction target consistent with keeping within two degrees of warming
- Work with suppliers to reduce their greenhouse gas emissions
The convenor of the Climate Leaders Coalition, Z Energy CEO Mike Bennetts, says the idea first came about back in October last year when he invited 13 CEOs to a dinner to talk about what businesses could do on a collective basis. Today that number has swollen to 60 business leaders, who will gather in Auckland later today to formally unveil the commitment. But what does that commitment really mean? We put the questions to Z Energy’s boss.
The Spinoff: In terms of companies measuring greenhouse gas emissions and publicly reporting on them, how will businesses go about doing this?
Mike Bennetts: Each company will work to its own reporting standards. The most important thing is there’ll be consistency in how they report so that year-on-year, people can see how they’re tracking rather than changing reporting standards every 12 months or so.
But it’s a really good thing that we report it and make it publicly available. That means people can measure progress or not, and stakeholders can hold us to account for what we said.
So it’ll largely function as a self-regulatory structure?
Yeah, and these reporting standards I refer to have, in some cases, been in place for up to a decade. There are two or three common global standards that get used so there’s nothing new in that. Companies have to go through a certain amount of proprietary activity to be able to measure things in the right way such as it can be audited. But [in the same way] there’s an accounting standard, there’s a standard for reporting environmental impact.
How often can we expect reports to be made publicly available?
I would certainly expect that these companies would report on these measures at least annually. Each company is obligated under the law to report certain information [and] this is a voluntary aspect of that. It’s not a legal requirement, but, say, in Z’s case, we publish an annual report each year, so it makes sense for us to include our emissions reporting. Other companies like New Zealand Post (a state-owned enterprise), for instance, might choose to do a separate report.
So these reports on greenhouse gas emissions will be released separately by each company, not as a collective under the Climate Change Coalition?
We’re not looking to create a separate report. We think each company needs to be held accountable for its own actions and commitments. The coalition is more around giving other companies the confidence to step up into this space and share good ideas with one another.
Another part of the statement says that companies will work with their suppliers to reduce their greenhouse gas emissions as well. How will this work for a company like Z Energy?
Z Energy’s actually a really good example. We deliver a lot of fuel around the country and we don’t actually do that ourselves – we have that outsourced to a logistics company. So recently, when we reviewed and renewed our contract with them, an explicit part of that contract [asked] ‘What are you going to do to reduce your emissions in delivering services for us?’ and ‘What can we do together to create more efficient ways to deliver fuel?’. Each of us has committed to actions in that contract that when done will reduce emissions. It’s as simple as that.
Most of these companies have sophisticated procurement processes. I think instead of procurement solely focusing on “What’s the cheapest price?” they can ask, “What’s the best price and what is the supplier doing around reducing emissions as they carry out the work on my behalf?”
In line with the Paris Agreement, the coalition has set a public emissions reduction target consistent with keeping within two degrees of warming. How confident are you that you can achieve this? Especially with firms like Fonterra – a massive contributor to New Zealand’s emissions – involved?
We’re relying upon each company’s integrity here, or certainly the integrity of the chief executive. When Z says we can set a target that’s within two degrees, Z has already published a target that says we’ll reduce our operational emissions by 30% by 2020. So we’ve already made that promise.
For some companies, the two degrees reduction can be done in the short term, while perhaps for a company like Fonterra, it’s more of a 10+ year commitment. [But] all of that still fits into the envelope of the Paris Agreement. The world can’t simply reduce emissions by ‘X’% immediately. We have to stick within the two degrees track from now through to 2050. Some companies will do things that will benefit New Zealand early on, while other companies will be slower to yield benefits. But overall, the portfolio says that what someone does today will help out someone else who takes longer to deliver their benefits.
Are you able to say if the commitment includes just Fonterra’s own operations (which was the case with its pledge to reduce net carbon emissions to zero by 2050) or also those generated on-farm by its shareholding farmers?
I don’t know the specifics for Fonterra, but I imagine if it’s not bullet point number two, then it’s bullet point number three [working with suppliers to reduce their greenhouse gas emissions].
As the largest retailer of fossil fuels in New Zealand, I’m sure the irony of Z Energy leading this coalition doesn’t escape you. Why should people see this as a real effort by Z and not just an attempt at greenwashing?
I draw a distinction between what Z does to run its business and what we sell. As I mentioned earlier, we’ve set a target. We’re working very closely with our customers and other technology experts around the world to find alternatives to hydrocarbons, and actually, we could sell something alternative to hydrocarbons tomorrow. But New Zealanders don’t want to pay for the alternative because frankly, right now, it costs a lot more to use a non-fossil fuel in your vehicle, whether it’s a hydrogen, an electron, or a biofuel.
However, that doesn’t actually stop us from getting [involved]. We’ve spent $26 million building a plant to create biofuel, and that’s a lot of money – even for a company our size. So there are steps we’re taking to provide New Zealanders with alternatives so that they don’t have to solely rely upon fossil fuels. We’ve got eight EV charging stations, we’ve got biodiesel coming to market, we’re working with Air New Zealand and others to see what we can do to create a biojet so they can reduce their reliance upon fossil fuels.
We recognise we’re very much in the middle of the problem, and we’d like to move to being at the heart of the solution. We’ve been saying that publicly since November 2010.
Taking the bigger picture, New Zealand’s greenhouse gas emissions are minuscule compared to other nations. Is it possible for this coalition to exist as more than just symbolic exercise on the global stage?
Possibly. Symbolism’s nice and it’s helpful, but it doesn’t necessarily deliver results. The important thing is that each of us takes actions to deliver results and be confident that one or more of these companies will come up with a great way to do something. Other New Zealand businesses could benefit from that experience or that could be something that we could either share or even sell overseas if there’s a proprietary technology. For example, there are things being done in the agricultural sector to try and find ways to reduce emissions through technology and it would be really great to make money out of that by selling that solution to somebody else.
The Spinoff’s business section is enabled by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.
Check out how Kiwibank can help your business take the next step.