The sustainability challenge

Speech notes for address to Buddle Findlay Sustainability Seminar. Wellington.

Thank you for the invitation to launch Buddle Findlay's seminar series on the theme of sustainability.

I believe that the sustainability challenge is a defining issue for the twenty-first century.

How nations grapple with that challenge will have not only a significant impact on the world’s environment, but will also determine whether they themselves can prosper and sustain their way of life.

There will be no prosperity without sustainability, but a commitment to sustainability will help us lock in prosperity.

International discussion of the concept of sustainable development began at the UN Conference on the Human Environment in 1972. The Conference declared that:

"The protection and improvement of the human environment is a major issue which affects the well-being of peoples and economic development throughout the world."

Fifteen years later the concept matured to its modern form in the 1987 Brundtland report of the World Commission on Environment and Development. It was there that Gro Harlem Brundtland, former Prime Minister of Norway, coined the best-known definition of the concept:

"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

Although the concepts and issues were well known by the 1990s, sustainability was not a mainstream concern for most people.

That perception has changed dramatically in the last few years because of the recognition of the threat that climate change poses to our world.

And, like sustainability, the issue of climate change is not new. It was in 1985 that the World Meteorological Society first predicted that the build up of greenhouse gases in the atmosphere would cause global warming.

What is new is the realisation of the huge costs and risks of allowing uncontrolled damage to our climate to continue unchecked.

Those risks and costs are already with us according to the Stern Report on the Economics of Climate Change commissioned by the British Government:

it estimates the economic cost of Hurricane Katrina to have been around $125 Billion, the equivalent of around 1.2% of United States’ GDP.
it estimates that 35,000 people died in Europe's worst heatwave on record in August 2003 : 14,000 in France, 7,000 in Germany and over 2000 in the UK – and that agricultural losses from the heatwave reached $15 billion.

While climate change is undoubtedly a very pressing environmental challenge, developing a truly sustainable nation also requires a broader focus on our economy and society and in the way we think about ourselves as a nation.

Sustainability is a term most commonly applied to the need for sound environmental policies. But it is a concept I believe we need to apply across economic, social, and cultural policies too. Those are the four pillars of a sustainable nation.

I believe the four pillars are mutually reinforcing: we cannot build a strong economy on a society where too many are left to fail and where we plunder the natural environment for short term gain.

Conversely we cannot build a strong society on an economy which fails to generate the wealth required to fund opportunity and security for our people, protect our environment, and develop our culture.

The investments we make in social success – education and skills, health and housing, support for families young and old – will continually reinforce our nation’s ability to build a strong economy, and deliver the non-material benefits of a sustainable environment and high sense of self esteem and pride.

Once you take a broader view of sustainability of the kind I have outlined, it becomes clear that we have a once in a generation opportunity to improve our way of life, our standard of living, and the state of our environment by putting sustainability at the heart of our thinking and decision making.

There are plenty of interest groups, and some politicians, who will tell you that the answer to sustainability issues can be found in a single market-led policy tool, or the introduction of certain regulations, or the banning of some kind of product or service.

But there is no single solution which can deliver the broad outcomes I have described, and those approaches which are too narrowly focused will miss the wider opportunities for economic, social, and cultural development.

Solutions will include a range of measures to both reduce unsustainable activities, and encourage new behaviours and new businesses which are more sustainable. These solutions will include:

Market based tools – such as those we are considering around an emission-trading regime, or the setting of procurement guidelines for government purchasing of sustainable goods and services.
Incentives to change behaviours – such as those being offered for the installation of solar water heating, or the investigation by the Ministry of Transport of differential registration fees to encourage people to buy cleaner vehicles, or the improvement of public transport in our cities to make it more attractive than the private car.
Regulation – such as the minimum exhaust emission standards we are developing for imported used vehicles, or the changes to the Building Code.
Information – such as the fuelsaver.govt.nz website that provides a guide to purchasers about the fuel economy of their new and used vehicles.

In coming to decisions about what tools to use, the government is applying common-sense principles. For example:

everyone should play a part in the sustainability challenge, bearing in mind that it will be easier for some sectors to reduce their emissions or change their behaviours than for others,
those who cause emissions, or contribute to unsustainable activities, should face at least some of the true costs of their actions.
measures must be fair. The road to a more sustainable economy and society should not exclude groups in society, and it should not penalise groups who are unable to respond.

Over a number of years we have been working to introduce sustainability principles into legislation and policy:

In January 2003 we launched a Sustainable Development Programme of Action setting out the broad principles for policy and decision-making, and applying them in practical projects across water, energy use, urban development, and child and youth development.
We rewrote the land transport legislation to put an emphasis on sustainability. Over seven budgets we've increased spending on public transport by around 750 per cent.
We made sustainable outcomes a key purpose of the new Local Government Act in 2002.
Our first generation of climate change mitigation policies included provision for greenhouse gas agreements with industry; support for projects to reduce emissions, which helped stimulate renewable energy investment; investments in research on pastoral greenhouse gas reductions; and development of policy for the Permanent Forest Sinks initiative. It also included plans for a carbon tax, which was not politically feasible after the 2005 election.

Over the last two years it has become apparent that New Zealand’s net Kyoto position is in deficit, and not in credit as had long been forecast. That has led us to prepare a second generation of policies which will be comprehensive in their reach across energy, transport, and land management, and include consideration of emissions trading.

The key objective is to drive down our greenhouse gas emissions.

Climate change minister David Parker has announced that government officials are working on how an economy-wide emissions trading scheme to support that objective could be designed.

The feedback we received through our recent consultation on this issue – and we received over 3000 submissions – was that a form of emissions trading was the mechanism favoured by many to achieve emissions reductions.

Emissions trading is seen as a potentially flexible system, which allows businesses to find least-cost solutions to meeting their emissions reduction targets.

The draft New Zealand Energy Strategy is also critical to driving down emissions. Its long-term goal is to have the country’s electricity produced from renewable sources to the greatest extent possible, with the aim of moving fossil fuel generation out of the baseload and into reserve supply.

I know that energy companies and large energy users are actively investigating measures to increase the generation of renewable energy, and reduce emissions. There is renewed interest and investment in geothermal energy, and continued development of wind farms.

The forthcoming decisions on an emissions trading system will support these developments by providing better certainty of outcome for business.

It is very encouraging to see the leadership on emissions trading being taken by the NZX Carbon Market Working Group. Last week they launched the TZ1 (Time Zone One) concept which aims to make New Zealand a leader in carbon trading, and indeed the centre for it in the Asia-Pacific market.

This is great thinking and ambitious, strategic business leadership.

Government’s attention is also focused directly on emissions reduction in the transport and land based industry sectors.

Transport greenhouse gas emissions are projected to rise dramatically unless we New Zealanders change our ways. So we are putting in place a range of related measures:

The government has increased funding for public transport by around 750 per cent since it came into office, and more is planned.
We have brought the nation's rail track back into public ownership, and begun the largest programme of upgrading and rebuilding in decades.
We've introduced a sales obligation which will see biofuels beginning to power our cars from next year.
And decisions have been made to ensure that cars imported into New Zealand in future meet higher emissions standards, and that consumers have proper information on the fuel efficiency of the cars they are purchasing.

Agriculture has particular challenges in becoming more sustainable, but it is also a sector with some of the greatest potential for benefit.

Our land and water needs to be managed carefully, using the best science to ensure that we can sustainably produce high quality food and agricultural products for the international market.

New Zealand research is already showing how farmers might be able to make sustainability part of mainstream farming practices:

Work on nitrogen inhibitors shows promise for reducing nitrogen leaching from farming systems, and improving the quality of water in our streams and aquifers at the same time.
Research on pastoral greenhouse gases could lead to lower methane emissions from agriculture and improved productivity.

We are already world leaders in food production and food safety. Now we can aim to extend that leadership into sustainable production and marketing. Crucially, we need to demonstrate our sustainable credentials from the farm, orchard, and vineyard gates, and also from our forests and marine resources, to the ultimate consumers and users of our products.

The benefits of this kind of approach will extend from the producers to the businesses which develop sustainable processing, packaging, marketing and transport solutions for our products.

We can profit from sustainable production, and the knowledge and skills we develop around that will be in demand worldwide.

In so doing, we will protect and enhance New Zealand's reputation, and we will improve the quality of our environment.

Only last week, Rob White, the CEO of the New Zealand Wine Company said on Morning Report that its move to carbon zero status is lifting demand for its wine, raising its profile, and helping offset some of the impact of a strong dollar on its bottom line.

At a sector wide level, the New Zealand wine industry is demonstrating tremendous leadership with a draft sustainability policy released at the beginning of March. It aims to have all New Zealand grapes and wine produced under independently-audited sustainability schemes by vintage 2012.

Underpinning the response to sustainability in agriculture is our investment in research science and technology. Overall government investment in areas like biotechnology is around $195 million per year, and there will be further announcements in the budget around our investment in science and research programmes related to sustainability.

It should also be noted that the Crown Research Institute, Landcare, has led the way in New Zealand in developing carboNZero, a credible programme through which companies and other organisations can seek recognition for being carbon neutral.

Sustainability is also a key focus in the current review of the New Zealand Tourism Strategy.

The draft strategy makes sustainable business practices central to the future vision for the industry, and proposes a range of actions they will need to take, like:

reducing and mitigating carbon emissions from travel within New Zealand and to and from overseas markets, and reducing energy use overall.
extending Qualmark to incorporate environmental quality standards.
working to protect conservation values at key natural sites, and
setting targets for measuring these outcomes.

New Zealand has an enviable reputation as a country with a clean environment, smart and innovative people, and an inclusive community. To maintain and build on this priceless reputation, we need to be bold in our thinking.

That’s why I have said we should aim to be the first nation to be truly sustainable, and aim to be carbon neutral.

What I am seeing across New Zealand, and what is reflected in the examples I've just mentioned, is a huge interest from individuals, communities, and businesses in achieving greater sustainability.

I believe that in the years to come, the pride we take in our quest for sustainability and carbon neutrality will define our nation, just as our quest for a nuclear free world has defined us over the past twenty-three years.

Taking a principled stand also has practical benefits at an international level. We can help build consensus and momentum for international action, and we can mitigate against attempts to use concepts like food miles as a protectionist tool against our primary and tourism industries.

In business, people are increasingly aware of the significance of sustainability as a defining New Zealand brand, and the importance of building sustainability into business itself to identify with and leverage off that brand.

More and more consumers are interested in not just what a product or service does, but also in how it is produced.

Research undertaken in January this year by Moxie Design Group, TNS Research Ltd and Nick Jones and Associates found that 27 per cent of New Zealanders, or 1.17 million people, say that they have purposely avoided buying from companies because of their impact on society or the environment. 279,000 people say they actually made that choice the week of the survey.

More importantly, the survey suggests that 1.4 million New Zealanders say they will pay a premium for products and services which have a positive social or environmental benefit.

What these results suggest is an increasing public expectation that business will act responsibly to address these issues. The same is true of our customers offshore.

These are trends that cannot be ignored. We have already seen the risk to our international trade and reputation from the recent debate over food miles. However wrong and misleading the criticism of New Zealand on that issue, we cannot ignore the signal it sends us about the importance of being sustainable.

Many in business have already got the message loud and clear and are actively implementing sustainability policies. The government is keen to work with business networks to promote awareness of what can be done by business both to raise the value of what it does and to contribute to a more sustainable New Zealand.

It is important that government shows leadership on sustainability, and gets its own house in order when it is encouraging individuals and business to take actions for sustainability.

That’s why we have committed to moving the public service toward carbon neutrality.

This year, six government departments will commit to achieving carbon neutrality by 2012, and next year all other departments will begin to follow in their footsteps.

We are also developing sustainable procurement policies, which will use the government’s substantial purchasing power to support environmentally friendly production and improved cost effectiveness over the whole life cycle of goods and services.

For example, we will be replacing the VIP car fleet with more fuel-efficient vehicles. This simple measure will lead to 550 fewer tonnes of CO2 being emitted, 400,000 fewer litres of fuel being used, and $500,000 being saved over three years.

We can also lead the way in our commitment to sustainable buildings. For example, the Department of Conservation’s new home is in a retrofitted building which:

uses rainwater storage, and has reduced water use from the town supply by sixty per cent.
has achieved a forty per cent reduction in energy usage, through the use of natural light, energy sensors, and efficient lighting.
has automatically opening windows, and a highly efficient ventilation system.
has full recycling facilities on all floors, and recycled waste materials during the construction process.

This building is the first refurbished building in New Zealand to achieve a 5 star ecological rating.

Improving energy efficiency and sustainability have been key considerations in the review of the Building Code we have been undertaking. Changes announced last week will bring about energy use reductions of thirty per cent in new homes, lower the cost of solar heating, and implement new standards for energy efficient lighting in commercial buildings.

We are now consulting on further energy efficiency measures for water heating and heating and ventilating systems.

Going forward, one of the big challenges in energy efficiency and conservation is retrofitting the hundreds of thousands of homes built before insulation was made mandatory in 1977.

Government has a programme in partnership with other stakeholders like community trusts to retrofit more than 12,000 homes a year for older people, and for others on low incomes with health and disability issues. There has also been a programme running to subsidise retrofits for privately let homes with low income tenants, and another for Housing Corporation properties.

All such moves for greater energy efficiency help lower demand for electricity, and make our vision for a future built around renewables more feasible.

The Labour-led government's vision for a sustainable New Zealand is based on the belief that it is not only the right thing to do, but also that it will be positively beneficial to our economy and society and to our nation’s standing in the world.

We are making sustainability a core part of our approach to policy.

While the challenges are undoubtedly great, the opportunities and benefits of New Zealand becoming a sustainable nation are greater still.

The good news is that there are households, businesses and communities throughout our country which are already taking up this challenge with enthusiasm, and doing everything in their power to reduce their emissions, recycle their waste, and conserve water.

New Zealand as a nation will be enriched in every way by tackling and winning the sustainability challenge.

Thank you.