Despite near-universal recognition of the need to tackle climate change why are many NZ businesses not doing the basics?

New report says a lack of sustainability benchmarks leads to frustration among business leaders

AccomNews Thursday, January 5, 2023

0 6 minutes read

A new research report analysing the sustainability work, attitudes, and efforts of businesses in six major sectors shows a business community that is trying to do its best but largely lacking the guidance to convert will to action. Though 96 percent of businesses surveyed have noticed the benefits of adopting sustainable solutions, less than a third of companies have the ability to benchmark their own sustainability performance against other comparable organisations.

Global energy and automation digital solutions provider Schneider Electric produced the New Zealand Business Sustainability Research Index with Perceptive, which interviewed 300 New Zealand business decision-makers in operations, finance, technology, and sustainability in organisations ranging from two to over 100 employees. Leaders were canvassed in the retail, construction, telecommunications and technology, manufacturing, professional services, and electricity, gas, and water services sectors.

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A few key barriers were identified among some of New Zealand’s top business decision-makers, close to one-third (32 percent) say the biggest barrier for adopting sustainability solutions within their organisation is a lack of government incentives for sustainable technology adoption – even though exactly half of the businesses surveyed are required to report on sustainability in their business plans or stakeholder reporting among those with 50 or more employees, that figure is 58 percent. There is also considerable variation in reporting across industries, with just 42 percent of construction businesses being required to report on sustainability, one of the lowest rates across all industries surveyed.

Of those surveyed, the small to medium businesses (two to 49 employees) have the lowest uptake and sense of urgency to adopt sustainability solutions, and the lowest agreement (51 percent) that their business is on track to meet their sustainability targets. Among businesses with 50 to 99 employees there is 76 percent agreement, and those with over 100 employees have 81 percent agreement.

Business leaders on the frontlines of change confirm that a major barrier is a lack of comparative data.

The Vineyard Manager at a large corporate wine company, says, “We don’t have a true baseline that we are comparing ourselves against. Another sustainability barrier is people – changing their mindsets. It is now part of performance reviews.”

A large logistics company in Auckland notes that their organisation’s goals are specific, including zero waste into landfill by 2040, but better communication is needed: “It would be nice to hear about what other organisations are doing in the news in terms of sustainability initiatives. Some of the initiatives in the UK far supersede what’s happening here.”

Mumin Bhat, the National Business Development Manager for Ecostruxure Power at Schneider Electric, says, “The research identifies benchmarking as a common hurdle, and the main sustainability benchmark systems of Green Star Rating and NABERS NZ have high awareness among businesses, but unfortunately the accessibility isn’t there yet.

“Businesses perceive the barrier to entry as too high, and they get scared away before starting. But, there is an easy way to make a start – what all businesses can do now is look at incorporating power and energy meters with software for power monitoring and energy management. What this does, is it allows a business to have an instant view of where the major energy loads are and where they can create immediate efficiencies and direct investment into the right areas.

“When it comes to incentivising and implementing change towards sustainability objectives, business leaders can’t just want to do it for ROI – they have to do it for their own morals and conscience, but this is harder when businesses are struggling to measure ROI against sustainability metrics. A monitoring system gives business leaders control.”

Tim Burrows, CSQ & HSE Business Lead NZ at Schneider Electric, says the research reveals a conundrum, with widespread understanding of the critical nature of sustainability initiatives, but a number of hurdles around benchmarking performance and relevant incentives. “The research paints a picture of the business community at crossroads. There is near-universal recognition of the need to tackle climate change, and clear KPIs and initiatives in place for most New Zealand businesses. However, when we look at the actions being taken, many businesses are not doing the basics.

“There is a large disconnect between how well businesses perceive they are doing versus what actions they are actually taking.

“The research finds large organisations tend to be further along on their decarbonisation journey thanks to additional disclosure requirements, increased shareholder and employee expectations, and access to greater resources and/or expertise to develop their sustainability targets and roadmap. There are a variety of different reporting measures seen, with the top two being general impact or CSR reports and data from business use. However, these levels are still relevantly low and reporting types do not appear to be advanced at this stage.”

The research also identified some key distinctions relating to business size. Large and small businesses are more likely to say that a lack of government incentives is a barrier preventing them from adopting sustainability technology.

Medium-sized businesses, on the other hand, struggle most with the lack of buy-in from employees and a lack of dedicated personnel and training to drive adoption internally. And these businesses are more likely to mention a lack of financial resources to invest in sustainable technology, along with a need to prove ROI to business stakeholders.

The Schneider Electric white paper, the New Zealand Business Sustainability Research Index: ‘Transforming Intention To Outcomes’, can be accessed here: https://go.schneider-electric.com/NZ_202210_Sustainability-White-Paper_MF-LP.html

Fact Sheet

Retail – 36 select business leaders in the retail sector were interviewed for the following findings:
Overall, these business leaders believe there are fewer benefits in sustainability reporting than business leaders in other industries. The biggest benefit these business leaders see in adopting sustainability solutions is setting sustainability targets (33%).
The biggest barrier for is adopting sustainability solutions due to reduced budgets because of Covid-19 (31%) and needing to prove ROI to business stakeholders (31%).
Professional Services– 22 select business leaders in the professional services sector were interviewed for the following findings:
Of those surveyed, 75% say they are required to report on sustainability—the highest across all industries.
The biggest benefit of adopting sustainability solutions for those surveyed is setting sustainability targets (50%) while the biggest barrier is the lack of government incentives for sustainable technology adoption (36%).
Construction – 26 select business leaders in the construction sector were interviewed for the following findings:
Of those surveyed, only 42% are required to report on sustainability, revealing the Construction industry has fewer requirements to report on sustainability in its business plans/stakeholder reporting.
85% agree that businesses need financial incentives from the government for sustainable transformation to be viable.
Only 27% claim they conduct sustainability audits.
42% strongly agree they have specific sustainability targets in place.
There is limited agreement among this cohort that sustainability initiatives create cost savings in this sector (only 8% strongly agree that the benefits outweigh the cost when it comes to adopting sustainable technologies).
81% either agree or strongly agree their organisation has initiatives based around sustainability.
35% say adopting sustainability solutions is not seen as urgent or material for business (which is the biggest barrier). Other barriers include (at 31% each) a lack of government incentives, lack of expertise on how to implement sustainable tech, and difficulty moving from strategy to action.
The three biggest benefits are reducing carbon footprint (35%), improving the organisation’s reputation (38%) and setting sustainability targets (35%).
Out of the industries represented in this report, construction is the least likely to invest in renewable energy solutions on site (58% say they are either likely or very likely to invest in this area).
Manufacturing – 36 select business leaders in the manufacturing sector were interviewed for the following findings:
Those surveyed in the Manufacturing sector were more likely to say they experienced the following benefits from adopting sustainable solutions: increased efficiency/productivity (53%), creating a positive social impact (44%) and saying it aids their environmental and sustainability accreditation (41%).
The biggest barrier to adopting sustainable solutions among this cohort is a lack of financial resources to invest in sustainable technology (42%).
Telecommunications and Technology – 32 select business leaders in the telecommunications and technology sector were interviewed for the following findings:
At 84% they see the highest consideration for digital transformation as a way to be more sustainable.
Their biggest barrier (47%) is a lack of buy-in/uptake from employees.
The biggest benefits are (at 41% each) attracting and retaining staff and meeting government/industry body standards.
Electricity and Gas Services – 20 select business leaders in the electricity and gas services sector were interviewed for the following findings:
The top three sustainability goals identified are around energy – be it new energy solutions, energy efficiency or reducing their energy consumption – (25%), reducing their carbon footprint (20%), and implementing better technology/software (15%).
50% say the main barrier is a lack of financial resources to invest in sustainable technology followed by of a lack of buy-in from employees (30%), lack of government incentives (30%) and the need to prove ROI to business stakeholders (30%).
The biggest benefit in adopting sustainability solutions in this sector is translating global sustainability goals into local context (42%).