Governance news bites
A collection of governance-related news snapshots that you might have missed in the past two weeks.
Directors are urged to move more quickly than the Government on climate governance.
Businesses are seeking certainty on climate regulations and impacts, but that’s not something the Government is going to provide, says Parliamentary Commissioner for the Environment Rt Hon Simon Upton.
Speaking at an IoD/Chapter Zero event focused on “Profit and the planet: (In)convenient truths”, Upton said business leaders need to take the lead on climate action if they are to survive in an uncertain future.
Government actions are driven by electoral short horizons, influenced by voters who may think differently to you and by lobbyists from industries that may have different priorities to you, he warns.
“Environmental disruption is going to throw a lot of uncertainty your way. You don't have certainty in business,” Upton said. “It's all about staying awake to what's changing in markets around you.
“Certainty is not something you can demand of governments – or the environment.”
Upton offers the Tatua Dairy Company as an example of how directors could make their organisations more resilient to climate impacts, new climate regulations and uncertainty.
“Its owners say they want to be around 100 years from now. They are quite explicit about that, taking a multi-generational view of the business. Tatua has no magic crystal ball but taking a very long view forces it to take risks, including environmental ones, seriously. It is a mindset far removed from quarterly returns or marketing.”
That includes sacrificing short-term returns – a risk in the current challenging economic environment – to develop a value-adding business model that is positioned to thrive as the climate transition shakes up markets and sectors, he says.
Also speaking at the event, Dr Rod Carr CFInstD, chair of He Pou a Rangi | Climate Change Commission, similarly urged boards to lead, rather than expect governments to show them the way.
“Governments may, at this point, have done as much as you can expect them to do to shape the rules by which we play this game. The mantle of responsibility has now moved to the business sector which, in its own self-interest, should now seek out the opportunities to develop a low-emissions economy,” Carr said.
For directors, understanding what science is telling us is important if they are to make good decisions on behalf of their organisations, he says.
“The business community now has the insights, the tools, the technology and the opportunity to do this ourselves. Within 20 years, a generation will be asking everyone in this room who is still alive, ‘so what part did you play? When did you know? When were you fixed with knowledge about the damage you were causing? When did you have a position of responsibility that could have made a difference, but you didn’t?’
"Low-emissions products and services will be more valued by affluent markets in years to come. Low-emissions products and services will be produced by companies that young people want to work for."
On our current trajectory, which Carr sees little prospect of changing, climate impacts are set to be more severe, and sooner, than is generally understood. Climate change will impact specific places differently and directors have an obligation to explore what that may mean for their operations, their staff, their suppliers and their markets, he says.
“The current climate estimates are that by 2050 – when 70 per cent of the people alive today will still be alive – Sydney will have 50 days a year over 40 degrees Celsius and Dubai will have 40 days a year over 50 degrees Celsius.
"Some of our technologies fail at those temperatures. Life forms fail at those temperatures.
“Averages do not describe the lived experience that will arise from the damage we have done to our atmosphere and the planet's ability to cope with more greenhouse gas emissions.
“Don't wait for Wellington. Do not take your lead from those who will not, or cannot, lead.”