In recent years, ESG has attracted significant interest globally, with growing momentum for sustainability and ESG reporting in the private sector. However, despite this trend, in 2023 New Zealand businesses were found to be less proactive than Australian and Global 500 industries in communicating on climate science and sustainability initiatives.
ESG vs Sustainability
First, let's clarity the terms. Environmental, Social and Governance (ESG) can be seen as a framework to assess a company's performance. While often interchanged with the term 'sustainability', the terms differ. Sustainability is a holistic approach that aims to balance the economic, social, and environmental aspects of a company's operations for the long term. By contrast, ESG provides a framework to capture and consistently report all the non-financial risks and opportunities within a company.
NZ lagging behind
New Zealand is no longer leading the charge when it comes to climate and sustainability reporting requirements including climate-related disclosures. The world is catching up, and mandatory climate reporting is becoming the norm in many major markets.
A report by The Aotearoa Circle and Chapman Tripp titled Protecting New Zealand's Competitive Advantage reveals that 80% of NZ's exports, by value, are heading to countries where mandatory climate-related disclosures are already in place or will be soon. 40% of these exports are going to countries with—or considering—tariffs that price the carbon emissions associated with imported goods. This includes key markets like China, where both the Shanghai and Shenzhen Stock Exchanges implement climate disclosure requirements.
These global shifts mean Kiwi exporters already face pressure to align with international climate reporting standards. Whether it's meeting disclosure obligations or avoiding carbon tariffs, the stakes are rising.
ESG reporting is the gateway to a game-changing sustainability strategy
The international regulatory environment is evolving, and companies that act now to develop their sustainability and ESG capability will be better positioned for the future. We are seeing leading companies use their ESG reporting to do more than address the base level of reporting and compliance. Future-focused businesses are using ESG reporting frameworks to develop a culture of sustainability and innovation and ultimately drive competitive advantage.
We now know that businesses using ESG as a springboard to competitive advantage are also consistently looking more holistically at sustainability. They are strategically:
Aligning their ESG strategy with their company vision and values.
Regularly engaging with all company stakeholders.
Aligning with global reporting standards and science based targets
Setting clear targets measured by transparent reporting standards
Focusing on open and authentic communications internally and externally.
Integrating sustainability into the company culture.
This approach requires time, resources and effort. However, the result is an impactful sustainability strategy influencing culture, innovation, and business performance in the long-term.
I love to chat all things sustainability, culture, and comms. If this strikes a chord with you, get in touch. Coffee's on me.
Comments