Careful what you wish for.

Last week, the Minister of Commerce announced that MBIE would be rather hurriedly consulting on proposed changes to New Zealand’s climate reporting regime. The regime has been in for just over one year, and Minister Bayly asserts in his introductory letter to the consultation document that stakeholders are telling him that the reporting thresholds are too low, the cost of producing climate statements is excessive, the director liability settings are not suitable for the nature of climate reporting, and that the regime settings are also creating a disincentive to list on the NZX and are hampering the efficient operation of New Zealand businesses. So, in short, all a bit hard and uncomfy.

As the ever-sage and insightful Alec Tang at KPMG has pointed out in his latest post, it's important to remember that financial reporting has been a centuries-long experiment in the making. And even with this lengthy history, the challenges of standardisation, scrutiny, and general utility still keep coming to the fore. “As we navigate pain points and push-back in the adoption of climate (and broader capitals) reporting, it's important to recognise the centuries of learning and accepted norms (not to mention the evolving schools of economic theory that have shaped this thinking) that we're looking to disrupt and re-evaluate, let alone the new norms and common knowledge that we're seeking to establish.”

Nothing worth fighting for has ever come easy. Everything that has ever changed from the status quo for the better has required going through a period of transition that has felt hard and challenged us. This process of transition from not reporting to reporting climate risks and opportunities has been hard. Of course it has. It’s like being asked to speak a new language, and simultaneously teaching everyone else in your organisation to speak it, all at once. In a year. ?But as my amazing friend Claire Waghorn from Christchurch Airport describes it, going through this process of disclosure has also been a delight. A delight in that it was, finally, the way in for her to integrate and embed climate risk thinking into respective roles across her organisation in a way that makes sense to them. A way to meet people where they are. For this to be about all of us, not just the token woke greenie. A way to cost-out climate change in a way we do any other risk. A way to put a depreciation value on the planet.

But we would say that, wouldn’t we? We’re sustainability consultants. Helping quantify and disclose these risks is our bread and butter. Our business relies on the regime persisting.

Do we agree that it’s hard and expensive and onerous? Of course we do! We empathise and sympathise and struggle shoulder-to-shoulder with those who are doing all this for the first time, and doing it tough. Do we think climate risk disclosures are the answer to everything? Of course not. But we do believe they are a critical enabler.

For a long time, the answer to “Where to begin on sustainability?” was always “Just start”. To be completely honest, I found this glib response deeply unhelpful. Just start what, where? And why? While it’s true I kind of hate that the limitless world of sustainable development has morphed over the length of my career into effectively an accounting framework, I also get it. I accept the short-term pain for the long-term gain. Because I have seen first-hand what it does. I have seen climate-denying Board Directors go from sceptical to engaged. I have seen the penny drop as they recognise that there is, for the first time, a way of designing a strategic growth framework that can be truly sustainable – economically, socially and environmentally. I’ve seen them see where the opportunities lie, because they have surfaced them. And they’ve heard themselves describe what they are, in their own words.

The proposed MBIE changes will, effectively, bring New Zealand’s disclosure regime more into line with Australia’s. (Spoiler alert: This doesn’t mean it’ll be easier). And it’ll take away personal liabilities for Directors. Neither of these outcomes are disastrous, and, again, we’ll find a way to work within them. Those forward-thinking, savvy clients who genuinely see the opportunity provided by the disclosure regime have already indicated they will keep on keeping on. They have already recognised the long-term access to capital and value chain efficiencies provided through the regime, and are frankly disinterested in going back to the drawing board. Those who were aiming for chinning the bar and taking a compliance mindset are the ones who are getting what they wished for.

Once again into the breach we will go. Pause for thought, though, on the message we are conveying. In age-old kiwi fashion, this means choking when we were winning. Losing our nerve after the first hurdle, because everyone else is rapidly catching up. ?The fact that we were first out of the gate with this regime doesn’t mean we were being bullish. It just meant we were first. And now we’re simperingly cowing our way back to the back of the pack, where the naysayers think we belong. I for one, don’t stand for that.

I think what we need is a track we know we can win on; that we have won on before. That we want to win on. I watch the communities sinking under once-in-a-lifetime floods that come every year now, the inevitable droughts, the suffocating Gulf, and I know “doing our bit” is not only a cop-out, but what none of us wants.

The climate reporting regime as it is is hard, expensive and onerous. It is also providing the on-ramp to some really valuable conversations that look like a way out of this hot mess we’ve made for ourselves. The worst thing we can do now is to stifle those conversations.

This government is the one New Zealanders chose. That’s democracy. But what we did not choose – and I for one reject having chosen for us, is one that misses out on the huge opportunities that decarbonisation provides for us. As the incomparable Rod Carr said at the latest Climate Change & Business Conference – I reject the notion that we choose to rob our future generations of the opportunities available to them”.

No matter what your political leanings, I believe we can all agree on a few incontrovertible truths:

1. We cannot coast on the ‘clean green’ reputation we trade on (and for some industries, rely on) and continue to make short-sighted decisions with disastrous consequences. It is already costing us. This isn’t just bad for the place we live in – it’s bad for the economy. As the wonderful Nicola Toki says: “Business is predicated on understanding that if you have an asset that delivers your income, then you invest strategically in that asset to ensure a sustainable return over time.” One of the jobs of this government is to safeguard New Zealand’s economy. Healthy forests provide flood control and carbon sequestration; landscapes make money. Before the pandemic, New Zealand’s biggest export industry was tourism. Today,?more than 80% of our export goods are produced by our primary industries, and are therefore dependent on our natural resources. It makes good business sense to keep them going.
2. Going first doesn’t mean we’re being gung-ho. It just means we’re in the race. Getting our climate reporting regime to align more with Australia’s makes sense as our closest trading partner. But that does not mean scrapping where we’ve got to and starting over. If we don’t keep on keeping on, we face the very real risk of being out of step with the 90% of jurisdictions we trade with that are covered by a climate reporting regime.
3. Climate change isn’t an ideology: it is a fact. It is in fact, the only science-based phenomena that we choose to relate to as a political ideology – that we think you get to choose to believe in or not. It’s not Santa. Or a religion. It’s happening. Fast. And anyone who tells you otherwise is neither on your team, nor “pro-jobs”, nor talking sense, nor being reasonable or rational. They are just plain wrong.
4. Those who are feeling smugly self-righteous because they relate to being on the blue team as being pro-the economy and pro-growth are feeling this way because they’re seeing their ideologies play out. More roads, more building, more farming. ?No more money – just more chat about those things. It is a complete misnomer that being anti- any of those things means you’re anti- the economy, or anti-jobs. All of us want a better life for our kids, and their kids. All of us. But having more of stuff, that we know is harming our way of life, and theirs, does not mean more of anything in the long-run. The days of taking the tinny out fishing for schnapper in the Hauraki Gulf are gone. Because we took too much. Living the dream of having a quarter-acre block and a bach in the Coromandel is gone, because we took too much, and the prices went up out of reach. Having this land of milk and honey that we remember so fondly is just gone. Our rivers are polluted, our endemic species are dying out, and we’re allowing more mining, drilling and prospecting in the face of a biodiversity crisis. Those who are choosing to do their bit are being actively discouraged to do so - I now have to pay RUCs on my PHEV, the Clean Car Discount is dead, and the oft-promised investment in EV charging has been scaled back. ?Add to this the insanity that is allowing commercial fishing in the Hauraki Gulf – a marine protected area – and you’re getting the gist. We’re not working to protect what’s left because we want to add cost to a recession and threaten more job cuts – we’re doing it because it’s worth fighting for what’s left. Laying off tens of thousands of jobs and fast-tracking policies that can mess up the planet quicker and slashing spending that is rocking the economy so that you can chuck it at roads and mining and fossil-fuel extraction is not playing a long game. It’s burning the bed you lie in.?

It's time to face what has for so many years now been an inconvenient truth – the way we have been doing business is not working. We keep telling ourselves that doing more of the same is good for us, right now, and keeps us in the manner to which we have become very comfortably accustomed. But missing out on the opportunities that getting onto – and staying on – the right track is not only going to leave us out of whack with the rest of the world, it’s going to leave us with none of any of the stuff we need. And as Rod says, it will rob our kids and their kids of the massive opportunities we could have given them. ?

We are lucky enough and smart enough to see through this short-termist rhetoric that keeps self-serving elected leaders in their jobs for a few short years. Let’s all agree that we can be courageous enough to reject where buying-into it will leave us, and choose instead a way up, and out. That’s worth fighting for.

Sarah Holden Kelly Flatz Jack Kendall Raedon Kane Rachel Brown ONZM (She/Her) Mike Burrell Florence Van Dyke Karl Check Dawn Baggaley Sam Bridgman Louise Aitken Abbie Reynolds Daniel Street Camilla Read Abbie Bull Debra Blackett (she/her) Andrew Bayly Hon. Simon Watts MP FCA