An increasing amount of pressure is on the horizon for businesses – ahead of the immediate challenges and frustrations of Covid-19, inflation looms and, what were once distant climate-related risks, are now urgent issues.
One significant response; at least one fifth of the world’s 2,000 largest public companies have committed to meet net zero targets*.
Food, consumer and retail giants including Unilever, IKEA, Tesco and Nestle and tech or telecoms companies including Ericsson, BT and Tech Mahindra have substantial net-zero commitments across their global supply chains. This will transform how they do business and who they do it with.
This means that small and medium-sized businesses in countries like New Zealand that feed into these supply chains also need to meet these commitments. To secure their place in international markets, businesses need to act fast.
New Zealand businesses aren’t alone, and if we look offshore to trading partners, extended value chains and customers, governments and investors who move funds across our capital markets, there are adaptive measures already underway. We have the benefit of learning from these and bringing insights to boardrooms here.
How can New Zealand businesses adapt?
Here’s what I recommend:
Preserve and create value for growth, and investment. Generating wealth, and the ability to raise capital will fund business transformation.
Build organisational and individual talent into a workforce fit for the future; align workforce capabilities to achieve strategy, upskill for the digital world, rethink your physical and digital workspace to revitalise a sense of purpose and organisational energy .
Look to tech-enabled solutions, digitisation and data-led automation, and develop capabilities that will help you compete in a digital world – or risk being left behind by others who will advance more quickly, efficiently and intelligently than you. A sector using innovation to revolutionise its business models this way is NZ agritech.
Create lean and resilient operating models that operate across sanctions, cross-border mechanisms, regulations and security risks and manage the conflicts from global polarisation. Protect key assets and supply chains.
Understand demographic trends, systematic inequality and polarisation and how your business contributes to them, then, put in strategies to rebalance. An example is the disparity, job loss and anxieties inadvertently caused by technology development. The social disruption of our changing world is significant, so it is also imperative that how business navigates each step, results in a fair and just transition, and vulnerable parts of our community are not left behind.
Implement practices that assess the physical and transition risks of climate change, and in managing those risks, set meaningful targets that will support a collective global effort to net-zero. Look to solutions that create value, beyond compliance, and embrace broader strategic and operational transformation. Moves to increase transparency in reporting, and independent assurance of metrics and targets, will build trust for wider stakeholders.
It’s an exciting road ahead, and never has it been more important for businesses to bring the best talent and innovations to solving some of society’s biggest challenges. As multinationals drive their agenda and cast the net wider on how they tackle these issues on a global scale, New Zealand businesses and their boards need to know how to respond to be fit for the future.
* ‘Taking Stock: A global assessment of net zero targets.’ eciu.net/analysis/reports/2021/taking-stock-assessment-net-zero-targets
