Business

How is Climate change relvant to Business?

Many wonder how climate change could be a factor in business and how business could make an impact on climate resilience. Not only could the impact of business be huge, but it is necessary for the world to adapt to a changing climate. Globally, the response of businesses to a changing climate is increasing in importance. With certainty, business had a role in causing and worsening climate change. But, business could have the largest and fastest impact on climate resilience (The role of business in climate change 2016). The actions of the world’s most prominent economic leaders will make a difference in the quality of our environment now and in the future. With the creation of the Sustainable Development Goals (SDGs) in 2015 (The SDGs in Action 2022), the world realized the next step to climate resilience was a low-carbon economy. Sustainability is the way of the present and future, and businesses that want to succeed long-term must adapt while keeping environmental impacts in mind.

General Issues

As of 2020, in the marketing domain the dominant social paradigm, or the collection of habits and values within a given culture, boasts unsustainable practices (Alternative paradigms for sustainability 2020). From 2007 to 2017, the Aotearoa, New Zealand economy spent an estimated $840 million on droughts and flooding linked to climate change (Ministry for the Environment Manatu Mo Te Taiao: Climate Change 2022). If nothing were to change, we can expect extreme weather events such as droughts and flooding to increase. New Zealand insurance companies are already amending their policies to account for climate change, often increasing their prices in certain areas due to risk  (Ministry for the Environment Manatu Mo Te Taiao: Climate Change 2022). Furthermore, with a climate-caused refugee migration looming in Aotearoa, New Zealand’s future, we can’t overlook business as a great economic driver of people.
By using Aotearoa, New Zealand as an example, our understanding of the effect of business on climate change and business opportunities has the potential to grow in the Oceania region. Efforts and strategies towards building resilience to climate change concerning business in Aotearoa, New Zealand include:

efforts in Aotearoa, New Zealand

Other parts of the world

Business has a cascading effect on people and the environment. Wherever business is, people go and impact that environment. As the people of Aotearoa, New Zealand build resilience to a changing climate, they create opportunities for companies stationed in the United States to add to the market for climate resilience services and goods (Climate Resilience and Enterprise Opportunities in the New Zealand and Oceania Region). In the approaching decades, we expect demand for these goods and services to climb as climate change worsens (Climate Resilience Enterprise Opportunities in the New Zealand and Oceania Region).

Emission Trading Scheme (ETS) – Aotearoa New Zealand initiated their ETS to cut down on pollution. The ETS states measurable goals and steps to complete those goals by 2050. Under the ETS, businesses publicize their greenhouse gas emissions and “pay” for their emissions in emission units. Each unit amounts to one ton of emissions. The New Zealand government limits the number of units businesses receive (Aotearoa New Zealand’s first emissions reduction plan 2022, Ministry for the Environment Manatu Mo Te Taiao: Climate Change New Zealand Emissions Trading Scheme 2022).  Under ETS, for companies of the economics sector in Aotearoa New Zealand, those that reduce emissions make money and those that increase emissions from their previous years lose money. It’s no secret that gaining monetary value is the leading goal of business.  Likewise, with sustainability efforts on the rise, NZ companies that can continually reduce emissions hold the greatest potential to become capitalist leaders through earning off those that can’t cut their emissions (New Zealand Sets Emissions Targets In Pursuit of Net-Zero Carbon 2022).

Decarbonization Efforts

Key Players

Non-government Organizations (NGOs) like Oxfam New Zealand, Federated Farmers, and The Wellington City Commission

Banks like ANZ Banking Group, ASB Bank Limited, and Australia and New Zealand Banking Group Limited

Insurance companies like The Insurance Company LTD, Allianz New Zealand, and New Zealand Life and Health Insurance

Policy states New Zealand will reduce its emissions. Businesses must adapt or fall behind.

Projections and goals to reduce net emissions 50% by 2030. This would bring New Zealand’s emissions down to what they were in 2005. The agricultural, energy generation, transport, industrial processes, and waste sectors have the responsibility to meet government goals with subgoals and targets stated in the New Zealand government’s plan (New Zealand Government 2022). Likewise, policy directed towards corporations ensures such goals toward overall climate resilience get met.

Climate change is taking its toll on New Zealand’s economics through inflation in the housing and construction industries. (New Zealand Business Survey Isn’t Good News for RBNZ in Inflation Fight 2022). The main drivers for the inflation include a recent increase in labor cost and demand and supply chain problems (Annual inflation reaches 30-year high of 6.9 percent 2022). The past couple years saw a drastic price change that could be long-lasting due to climate change. 

Government and Business

TOURISM Carbon Challenge

In 2017, a case study looked into air transportation and its effects on tourism. Emissions from international travel rose 60% from 2007 to 2017, 38% was from visitor travel and 86% was residential. By 2017, carbon emissions for international aviation reached 8.4 million tons (Tarr 2022). 

Air New Zealand, New Zealand’s leading airline is majorly owned by the New Zealand government. With the goal to reduce net emissions 50% by 2030, projects focusing on operational efficiency, sustainable aviation fuel, continued fleet renewal, and zero emission aircraft technology are currently underway. 

Next Generation Aircraft is New Zealand’s mission to drive the development of zero emissions aircraft technologies. Mission Next Gen Aircraft has set two goals: in 2026 fly the first commercial demonstrator flight and in 2030 begin replacing the Q300 domestic fleet with a more sustainable aircraft (Air New Zealand 2022). 

In order to accomplish these goals, Air New Zealand has partnered with four companies with the intention of purchasing an aircraft in 2026 demonstrations. The partnering companies BETA, Cranfield Aerospace, Eviation, and VoltAero are currently working towards a sustainable commercial aircraft.