TL;DR: A report emphasises that New Zealand exporters must strengthen environmental credentials to maintain competitiveness amid global increases in climate-related disclosures and ESG standards. Key markets demand compliance, impacting both large and small entities in export supply chains.
Increasing Pressure on New Zealand Exporters
A recent report stresses that New Zealand exporters must validate their environmental practices to safeguard the nation’s competitive edge. This becomes crucial as global markets increasingly focus on environmental, social, and governance (ESG) standards due to rising concerns about climate change.
Sources and Findings
The report, produced by law firm Chapman Tripp and environmental advocacy group The Aotearoa Circle—founded by the late Sir Rob Fenwick—highlights a significant shift towards mandatory climate-related disclosure. According to the Task Force on Climate-related Financial Disclosures, over 60% of the world’s GDP is now under jurisdictions enacting or proposing such disclosures.
Impact on New Zealand Exporters
These evolving regulations have a direct impact on New Zealand’s key export markets. They could extend to both large exporters and smaller entities within their supply chains. A New Zealand exporter supplying goods to a company under these mandates might need to adhere to specific climate-related information sharing and emission reduction targets.
A Complex Network of Standards
Exporting companies face a complex array of both mandatory regulations and consumer preferences covering broad social and environmental issues, including greenhouse gas emissions, deforestation, and labour standards. This matrix is expanding to include voluntary initiatives like the Task Force on Nature-related Financial Disclosures, alongside established frameworks such as the Global Reporting Initiative and the Science-based Targets Initiative.
Climate Protection in Trade Agreements
The integration of climate protection measures into trade agreements with regions like the UK and EU signifies a shift where any regression could lead to the reinstatement of previously eliminated tariffs.
Proactive Management Recommended
With 80% of New Zealand’s export value heading to markets with active or impending ESG reporting requirements, proactive engagement with these issues is essential for businesses aiming to manage ESG trade risks effectively.
Industry Responses
Leading companies are responding to these pressures. Fonterra has set on-farm emission reduction targets, anticipating that 30% of its customers will require such measures by 2030. Zespri has made significant strides by ensuring 88% of its packaging is recyclable, reusable, or compostable. Meanwhile, Silver Fern Farms is producing certified grass-fed Net Carbon Zero red meat, offsetting emissions through farm vegetation.
Global Compliance Landscape
The report includes a map illustrating the breadth of the challenge, showing major markets like the European Union, the United States, India, Japan, and Brazil with mandatory CRD reporting, followed by a second tier including Canada and Australia.
Key Takeaways
Chapman Tripp partner and co-author Nicola Swan emphasises the critical nature of keeping pace with global demands for climate risk management and broader ESG capabilities. The Aotearoa Circle’s CEO, Vicki Watson, acknowledges the swift evolution of ESG reporting standards, highlighting the enduring nature of this trend.
This report serves as a crucial reminder for New Zealand exporters about the importance of enhancing their environmental strategies to maintain market access and competitive advantage in a rapidly changing global landscape.
