Sustainability on Hold:
Business vs Government Leadership
2003-2014
Associate Professor Eva Collins
Professor Juliet Roper
Waikato Management School
University of Waikato
June 2015
Contents
Report Highlights .................................................................................................................................................................................................... 1
Background ............................................................................................................................................................................................................ 2
Methods ................................................................................................................................................................................................................. 2
Environmental Practices Post-GFC ............................................................................................................................................................................ 3
The Water Paradox ............................................................................................................................................................................................. 4
A Fossil Fuel Economy: Carbon Uncertainty .......................................................................................................................................................... 7
Social Practices ....................................................................................................................................................................................................... 8
Diversity ............................................................................................................................................................................................................. 8
Social Media: New Channels of Communication ........................................................................................................................................................ 9
Drivers and Barriers to Adopting Sustainability Practices ......................................................................................................................................... 11
The Role of Government: The Search for Leadership .............................................................................................................................................. 13
The Turning Point for Action .................................................................................................................................................................................. 14
Conclusion ........................................................................................................................................................................................................... 15
Acknowledgements ............................................................................................................................................................................................... 17
Publications from the research project to date ........................................................................................................................................................ 17
References ........................................................................................................................................................................................................... 19
Figures
Figure 1 Firm Size of Respondents 2013................................................................................................................................................................... 3
Figure 2 Environmental Practices SBN Members 2003-2013 ....................................................................................................................................... 4
Figure 3 Environmental Practices Non-SBN Members 2003-2013................................................................................................................................ 4
Figure 4 Social Practices 2003-2013 ......................................................................................................................................................................... 8
Figure 5 Drivers to Adopting Environmental and Social Practices 2003-2013 ............................................................................................................ 12
Figure 6 Barriers to Adopting Environmental and Social Practices 2003-2013 ............................................................................................................ 12
Report Highlights

This study reports the findings of the fourth national survey on the uptake of environmental and social practices of 520 New Zealand businesses. In
addition, results from follow-up interviews from a subset of twenty-four survey respondents also is included. The study is part of longitudinal research
examining the impact on sustainability practices of a changing external environment over more than a decade (2003-2014), including the global financial
crisis, increasing local and international focus on climate change and water and a change of the New Zealand government.

More than any other issue in the study, perceptions of water have changed most over time in terms of visibility and concern as a limited resource. As one
business pointed out, New Zealand’s largest export is water, embedded in products such as milk and wine. But water is a paradox for many businesses.
On one hand, there is an increasing sense of urgency that more needs to be done to protect water quality and availability, but at the same time many
businesses do not think they themselves can contribute to those solutions. There is a growing sense of unease, evidenced by 72% of survey respondents
stating that they are concerned about the water supply for New Zealand. At the same time, only 24% of businesses have targets to reduce water
consumption in their own operations.

Interviewees reported uncertainty around the carbon market, but not on climate change itself. The lack of government action and the decreasing global
price of carbon means interest in measuring and managing carbon has diminished. Some businesses stopped tracking their carbon footprint, while others
put their carbon strategies on hold, waiting for government action. A majority of interviewees wanted government to step in to level the playing field and
provide regulatory predictability to avoid fossil fuels continuing to dominate the economy by default. This may be a useful message for the New Zealand
government as it prepares for the Paris climate change talks in December.

Diversity, for most New Zealand businesses, means gender diversity - recruiting, retaining and promoting women. Specific targets for women were rare; it
was more common for companies to work on eliminating barriers faced by women. An emerging diversity issue was age diversity, particularly attracting
workers entering the workforce. Interviewees were trying to attract younger workers by emphasising flexible working hours and the values of the
company.

Social media is an under-utilised opportunity for most businesses with major concerns about how much time it took to effectively engage in these
communication channels. Businesses are reluctant to communicate their social and environmental practices, lest they be accused of being self-promoting
or disingenuous. Some interviewees had been exposed to the dark side of social media where they had been attacked either professionally or personally.

There is clear evidence of an emerging shift in what business expects of government. Many businesses want government to show leadership by levelling
the playing field between companies that practice sustainability and those that do not. Business managers recognise that while moving toward
sustainability might be good for business in the long run, it does not fit well with the short-term reporting cycle that drives most decisions. While these
expectations are not yet uniformly translating into demands, it is likely this will happen more frequently, especially as New Zealand’s brand and reputation
comes under increasing threat.
1
Background
National surveys on the uptake of environmental and social practices by
New Zealand businesses have been conducted in 2003, 2006, 2010 and
20131. Each survey was followed by interviews with a subset of survey
respondents to complement the quantitative survey data. This report
details the results of the 2013 survey and 2014 interviews.
Before the global financial crisis (GFC), the national trend was an
increase in the adoption of sustainability practices by business. The
survey results showed an overall increase from 2003 to 2006 in the
number of companies in New Zealand adopting environmental practices
and social practices with social practices more commonly adopted.
The 2010 survey highlighted the impact of the GFC. The survey results
found a “sustainability divide,” that is, the more social and environmental
practices a business had adopted prior to the GFC, the more likely they
were to add practices during the GFC, while companies with only a few
sustainability practices dropped those practices during the GFC. One of
our research partners is the Sustainable Business Network
(http://sustainable.org.nz/), whose members are included in the survey.
The results of the sustainability divide was most apparent when
comparing the environmental practices of SBN members to nonmembers, with SBN members increasing practices and non-SBN
members decreasing practices.
Social sustainability took the biggest hit from the GFC with both SBN and
non-SBN members decreasing social practices from 2006 to 2010.
What was unclear at the end of the 2010 study was whether the
companies without many sustainability practices would lose ground
competitively. As the impacts of the GFC lessened, would companies
increase social and environmental practices or would the divide widen?
The results presented in this report answer that question.
The report begins with details about the methods used for the survey
and interviews. Following the methods, the study results begin with an
explanation of environmental practices, followed by a discussion of the
emerging issues of water, carbon and the use of social media. Social
practices are discussed next with a focus on diversity.
Drivers and
barriers to the adoption of social and environmental practices follow,
including sections on the role of government and the business case for
sustainability. The report concludes with a discussion of the implications
of the research for New Zealand.
Methods
The key research question is: What is the nature and extent of
business adoption of sustainability practices in New Zealand? In
addition, the research details:




Changes in practices from 2003 to 2014;
Emerging sustainability trends;
Drivers and barriers to adopting sustainability practices, and;
Businesses’ perception of the importance of sustainability issues in
the future.
The core survey instrument remained the same for all four national
surveys with some questions being added or dropped to reflect the latest
trends in sustainability. Surveyed companies included companies who
had responded to the survey since 2003 and companies added for each
survey to replace those companies who dropped out of the study
because they were no longer in business or for other reasons. After
each national survey, a series of interviews was conducted with a subset
of survey respondents. The focus of this report is on the 2013 survey
and 2014 interviews.
An online and postal survey was conducted in 2013 targeted at
Managing Directors of businesses in New Zealand. There were 520
1
See pp. 17-18 for a list of publications from the research project.
2
respondents, a 23% response rate with 36% of respondents SBN
members and 64% non-SBN members.
Figure 1, highlights the firm size of the 2013 survey respondents with
48% of respondents small businesses, 34% medium-sized businesses,
reflecting New Zealand’s predominance of small and medium-sized
businesses, and 18% large business.
5%
5%
5%
14%
Healthcare and social assistance
Information media and telecommunications
Accommodation
Other
Twenty-four interviews were conducted in 2014. The interviews were
most often done with the Managing Director, but occasionally with the
Sustainability Manager for larger companies. Interviewees were selected
using purposeful sampling to ensure a diversity of respondents.
Diversity characteristics included: company size; Sustainable Business
Network members and non-members; companies who had adopted
many sustainability practices and companies that had no or very few
practices; companies who had participated in the survey since 2003 and
companies who were surveyed for the first time in 2013; and companies
from a variety of industries. The purpose of the interviews was to ask for
additional details about the answers given on the surveys. A question
about social media, not included in the survey, was added to the
interviews.
The following section details the environmental practices from the 2013
survey and 2014 interviews.
Environmental Practices Post-GFC
The industry sectors the survey respondents self-identified included:
21%
18%
7%
7%
7%
6%
5%
Manufacturing
Professional, scientific or technical
Agriculture, forestry and fishing
Construction
Wholesale Trade
Education and Training
Retail Trade
SBN members, who in previous surveys were more likely to increase
environmental practices compared to non-members, had again, as
shown in Figure 2, increased environmental practices in 2013. These
results are not surprising because as members of a business
sustainability organisation, the companies would presumably have more
interest in and be more likely to adopt environmental practices.
The more interesting results are for non-SBN members, pursuing the
question of whether the sustainability divide had increased or decreased
post-GFC. Figure 3 shows a significant increase in environmental
3
Figure 2
Environmental Practices SBN Members 2003-2013
practices since the 2010 survey. The biggest increase, up by 20%, was
38% of companies reporting they had waste targets. One interviewee
summarised the drivers for waste, “We aim to save costs but also reduce
the waste we send to landfill” (Retail industry).
Some of the
interviewees had ambitious waste targets, for example one interviewee
explained: “We have a target of more than 90% of our waste diverted
from landfill. We even have a worm farm right outside our kitchen”
(Health industry).
Another large increase was for energy targets, an increase of 18% from
2010, to 35% of respondents in 2013 claiming they had energy targets.
Recycling remained the most common environmental practice, with 84%
of respondents responding affirmatively to having the practice.
Figures 2 and 3 show the environmental practices since 2003, but water
and carbon, as explained below, were added to later iterations of survey.
The Water Paradox
Figure 3
Environmental Practices Non-SBN Members 2003-2013
More than any other issue in the study, perceptions of water have
changed most over time in terms of visibility and concern about water as
a limited resource. A similar trend of increasing concern for water is
reported internationally. Two-thirds of the world’s largest companies
acknowledged that they are exposed to water-related risks, with almost
a quarter saying such risks could limit their growth — for some, within
the next year (Makower, 2015).
Questions tracking water were added to the survey starting in 2010. For
New Zealand business, there is something of a personal responsibility
paradox. In the 2013 survey, 72% of respondents were concerned about
water supply in New Zealand, 67% were concerned about water supply
for their region and 41% were concerned about water supply for their
business.
4
However, only 24% of businesses said they had targets to reduce water
consumption. That is a minor increase from the 17% who had targets in
2010.
In the 2014 follow-up interviews, water was cited as the issue that had
changed the most since companies were surveyed just a year earlier,
with an increasing number of respondents citing it as a critical issue.
The paradox is that at the same time water is growing in importance, it
is still seen by some businesses as not being material to their own
operations. A typical response was the following:
Water falls out of the sky just about every day here, we don’t ever have
a sense of a shortage. It’s quite a minor issue for this business
(Healthcare industry).
Similarly, a major retailer interviewed said, “We use so little water, it is
not a big issue for us.” As this quote suggests, respondents talked about
water used in their building, for example, water in the kitchen or
bathrooms, but businesses did not look down their value chain or
overseas to the source of their products and services to evaluate their
water impact.
Even among those businesses that had an awareness of water risk,
many struggled to find effective ways to measure and manage it. An
interviewee who works with businesses on understanding their water
impact and risk summarised the challenge:
There is a very weak link between water and business
performance in New Zealand and that’s probably the biggest
issue in terms of getting water on the agenda. From a
government perspective, they need to recognise what New
Zealand is exporting is water, it’s just embedded in milk or wine
or whatever. At a really strategic level, that link between water
and exports needs to be stronger and then the appropriate
policies need to be put in place (Consulting industry).
Difficulty in measuring water use, especially in businesses that operated
across New Zealand, was seen as a constraint. A representative
comment from an interviewee in the telecommunications industry: “In
New Zealand there is a view that water is not a concern. It doesn’t
come up in our business as a high priority because we don’t have high
consumption. But whether that’s a fact hasn’t been explored.”
The lack of an effective pricing mechanism was cited as another
constraint by several respondents. As explained by one interviewee:
You see a tremendous growth in irrigation, particularly in the dairy
industry and the question is whether we as a country are appropriately
pricing water (Extractive industry).
Several respondents felt there will continue to be a lack of action until
there is a water crisis. Some interviewees concurred but thought the
crisis was happening now:
At a catchment meeting in the Canterbury region, over 400
farmers turned up, and that took everyone by surprise. This
issue has hit the headlines and there is an understanding that
what people are doing today they may not be able to do
tomorrow. Catchments are over-allocated in terms of nutrients
and suddenly there is a real interest (Agricultural industry).
For businesses trying to get a comprehensive picture of their water
impacts, there were challenges.
The costs of actual water use and discharge varies greatly in NZ so it has
not been a simple task to undertake a complete review of all our stores
in the country (Retail industry).
For the relatively few businesses that had water targets, it was not
because of government regulation, but driven by resource efficiency.
5
Not a great deal of legislative pressure on reducing carbon or
energy efficiency or any of the main impact areas, certainly
nothing around water. So what’s driving this is resource
efficiency and cost perspective rather than legislative pressure
coming out of the Beehive (Retail industry).
surfaces were used and as a consequence water went down the drain or
contributed to flooding.
There were also concerns about the various levels of local, regional and
national government involved with water. One manufacturer interviewed
complained, “I think it’s a bit of a political football. It has to get locked
down so business can get on with it.”
The challenge will be, businesses will sit up and take notice
when there is a cost or business risk. And if you see the issues
in trying to put a price on carbon, you try to put a price on water
you’re going to meet a huge amount of opposition, especially
when it’s perceived to not be a limited resource
There was some disagreement among interviewees over what the key
issues around water really are, with some respondents stating that the
problem is not over-allocation, it is under-utilisation. The argument
made is a lot of fresh water, due to the lack of water storage, does not
find its way into “productive” use.
(Consulting industry).
96% of the water that falls onto the country runs to the sea. We don’t
have a water access problem, but we do have a water usage and storage
problem (Agriculture industry).
This quote suggests that there was no value placed on water remaining
in the natural system. However, there was consensus from respondents
that the most effective way to better understand water impacts was to
measure it and charge for it.
Improving and investing in the
infrastructure was also raised as a need. Christchurch was cited as an
example of what happens to aged water infrastructure and concern was
expressed about the national infrastructure around water articulation.
One of the challenges cited to finding water solutions was the long-term
time frame needed, called “ultralong-term” meaning 100 years, by one
respondent, which does not align with political or business cycles.
Many respondents did not feel that the cost of water is properly
understood or charged.
Interviewees were looking for more government leadership on water, but
also advocated for a “government plus” solution. To manage all the
competing interests in a way that deals with some of the likely changes,
many interviewees advocated for a continuation of multi-stakeholder
discussions. The Land and Water Forum, which brings together multiple
interest groups to find a collaborative approaches to water, was cited by
several of the interviewees as a model.
Amidst all the variety of views on water, there was a common
understanding that the stakes are high for New Zealand.
As Kiwis, we’ve got this wonderful story about clean, green New
Zealand, but actually we run significant risk of completely
blowing that out of the water by the fact that we have
contaminated fresh water and the fact that we can’t swim in
rivers and streams. That’s a big contradiction and a real
concern, not only for consumers, but for our country and our
ability to export
(Food and beverage industry).
More incentives to use roof water also were cited as a solution by
interviewees. Another issue raised was with increasing population
growth requiring increasing development, more and more non-porous
6
A Fossil Fuel Economy: Carbon Uncertainty
Water and climate are inextricably linked. The predicted impacts of
climate change in New Zealand include changing rainfall patterns and a
higher frequency of droughts (Ministry for the Environment, 2014).
The business response to climate change has focused on carbon.
According to Colmar Brunton, 56% of New Zealanders believe climate
change is the biggest single problem facing the world today (Ireland,
2014).
For the 2010 survey, because of the passage of the Emissions Trading
Scheme (ETS), a question on carbon was added to the survey and the
results were that only 16% of respondents had carbon targets, growing
incrementally to 20% in the 2013 survey.
In the 2014 interviews, there was a lot of uncertainty around carbon.
The lack of government action and the decreasing global price of carbon
meant interest in measuring and managing carbon has diminished. One
respondent summed it up:
There’s been a definite drop off in carbon. The peak was 20072009, but the GFC and carbon price has undermined it
completely, meaning there’s no economic incentive. The change
of government has had a negative impact, they are not leading
the charge. As a business, it’s very hard to jump ahead and be a
leader in this space when you’ve got such close margins
(Transportation industry).
Some businesses have actually back-tracked on carbon:
We have measured our carbon in the past, but don’t do it anymore
because it’s too onerous and there is no value to us currently to do it
(Transport industry).
Even companies that had proactive carbon strategies noted the lack of a
pressure to initiate the strategies.
A few of our bigger customers are asking about carbon and we get that
verified through Carbon Zero. We looked at doing a carbon calculator on
our website, but we talked to our marketing guys and there wasn’t really
the interest (Transport industry).
Some businesses are being proactive because they view the issue from a
long-term perspective. One respondent, explaining the justification of a
technology adopted that would reduce their carbon impact explained:
It wasn’t saving costs, it cost a little bit more, but we felt there would be
a savings in the long-run. It was a good insurance policy against the
price of carbon going up. Ironically, the price of carbon has gone down
from $22 a tonne to about $1.50. But we anticipate in the long-term it
will go up again. So it’s a pragmatic business approach that ensures we
won’t have additional costs with increasing cost of carbon in the future
(Retail industry).
Not all business were looking for government action.
stated:
One respondent
We were pretty relieved that there wasn’t a change of government in the
last election and the ETS the Greens were pushing didn’t go through. We
knew it would put businesses out of business because that’s what it was
doing over in Australia (Manufacturing industry).
But that view was not dominant. The primary view was that business
does not like uncertainty and business wanted government to step-in to
level the playing field and provide predictability.
What we’ve seen with domestic carbon regulation, it wobbles.
And because of that potential endless tinkering, that regulatory
uncertainty means people are unwilling to commit their land or
company capital. What you need is regulatory certainty or
people won’t commit (Energy industry).
7
It was also noted in the interviews that the ETS was supported by both
the National and Labour parties. The question was how the ETS was
going to be applied. Companies were holding back on their carbon
strategies because, as one respondent put it, “ We are trying to find out
what are the rules of this game before we start playing on the field”
(Energy industry).
practices were giving to charity (72%) followed by 69% of respondents
engaging in local community projects.
Figure 4
Social Practices 2003-2013
The bigger the uncertainty, the less likely businesses were to commit.
If you don’t have regulatory predictability, you’ll end up with a
fossil fuel economy. Because renewables requires long-term
investment (Energy industry).
For progress to be made on carbon, it was clear there would need to be
long-term regulatory certainty. With only 20% of survey respondents
indicating they had carbon targets, carbon risk for individual companies,
let alone supply chain carbon risk, had not yet been assessed.
Social Practices
Sustainability is not just about environmental issues, it encompasses
social issues as well.
Social sustainability is defined as how an
organisation treats its people (employees) and its community. The
following details the changes in social practices over the years.
New Zealand businesses generally had a much higher engagement with
social practices compared to environmental practices. The trend from
the 2003 to the 2006 survey was that both SBN and non-SBN increased
social practices. While environmental practices overall showed divergent
trends and a developing sustainability divide, social practices showed a
decrease in 2010, with some dropping to below 2003 levels.
Figure 4 shows that in 2013, social practices have again increased,
although not quite up to the level that they were. The most common
Diversity
Within the interviews, diversity was a focus of the discussions on social
practices. Diversity has been included on the survey since 2003. The
question on the survey states, “My business engages in the following
socially related activities”, and “considers diversity in hiring” is one of the
options. In 2003, 43% responded yes to the question, ten years later
for the 2013 survey, 41% of respondents said yes, relatively unchanged
over the years. But there was not a good understanding of what
respondents meant when they ticked the diversity box.
8
From the 2014 interviews, it emerged that when companies ticked the
diversity box, what they fundamentally meant was gender diversity. And
although the survey question focussed on hiring, the interviews
expanded the discussion to include not only recruitment, but retention
and promotion of women to senior positions.
On recruitment, only a few of the companies interviewed had specific
targets for women. As one interviewee explained, “for hiring, we don’t
actively try to be diverse, but we actively try not to be a barrier”
(Transport industry).
An emerging diversity area was age, particularly for the next generation
of employees. Companies talked about what they would need to change
to be attractive to younger workers and salary does not seem to be as
important as flexibility and values. Two examples:
We have a relatively young demographic because we do hire a lot of
people right out of university. And consequently, we are thinking about
do we need to be more flexible in terms of work practices?
(Healthcare industry).
In a similar vein:
You can’t discriminate on any basis, but there are some
positions where you think, we have an imbalance here and we
should try to fix it (Healthcare industry).
An issue we are starting to look at is the generational one, what
are the values that the younger generation want from their
companies? I see that as a major challenge for our company
and other companies (Consultant industry).
Another strategy for recruitment was:
The biggest issue with hiring is that classic moment when a hiring
manager does not or cannot reveal all their biases. So the most
important thing to me, is that you have diversity on the panel doing the
recruitment because then the inherent biases, which people might not be
aware of, can be challenged (Energy industry).
For retention of women, there were a range of strategies employed:
We have a women’s group and their remit is to welcome women into this
very male dominated business, but also to come up with ideas about
how we can help alleviate barriers that they perceive. It’s on the agenda
and it’s a future leader issue if we don’t get it right (Transport industry).
Although the focus on diversity was women, companies talked about
other types of diversity. For example, one respondent gave the example
of hiring someone who had been unemployed for a couple of years,
taking a risk, but felt like they were giving the person a second chance.
Social Media: New Channels of Communication
The national surveys had not included questions on social media, but the
2014 interviews gave us the opportunity to explore these newer
communication channels for environmental and social practices.
For a majority of the businesses interviewed, social media was described
as an unexploited opportunity. Even those who had a social media
presence felt they could or should be doing more of it and better. One
interviewee explained:
A lot of businesses are doing amazing stuff, but haven’t thought about
marketing what they’re doing to consumers. The SMEs are really busy
people who don’t have the time or capabilities to be doing this
(Food and beverage industry).
9
Some businesses had quite sophisticated social media strategies, for
example:
We try to multiply the effect by teaming up with other people. We work
closely with bloggers. We want other people telling our story to their
networks (Food and beverage industry).
The most common form of social media was Facebook, but Twitter,
Instagram, industry blogs and Pinterest also were utilised by
respondents.
It was not uncommon to outsource social media
communication as it was viewed as taking too much time. In fact, the
biggest barrier cited by interviewees against using social media was the
perceived time consuming nature of the communication channel.
It’s something that needs to be really thought through before
jumping into it as a communication channel and one of our
challenges is that we don’t have a dedicated person and it’s
quite time consuming. You can’t say, “We are on Facebook,
we’re done.” It’s a daily, living, breathing, moving thing so it
requires a bit of work (Agricultural industry).
Within the different social media channels, there was a growing
understanding discussed by the respondents of the demographics
associated with each medium. For example, Facebook had a broad
reach, Instagram and Twitter were viewed as outlets for younger (under
40) people.
Social media was used for business-to-business
communication and business-to-consumer communication. An example
of business-to-consumer:
We use our Facebook page to ask questions of the customers, do
surveys on new initiatives that we are running. We are increasingly
using it as a vehicle for a positive story
(Retail industry).
In addition to promotion, there also was an issues management angle of
social media for some businesses.
It [social media] has created a cheap, rapid channel and I think most of
us have not got our heads around how to respond to that. We have a
communication team, but their core role is not issues management, but
more communication with farmers. We do use Twitter around all sorts
of things like publicising events, interesting things in the community, but
in terms of monitoring when issues flare up, we’re pretty reactive I have
to say. It can be enormously time consuming, we’re just not resourced
to manage in that way (Agricultural industry).
Other businesses, particularly in industries that had been criticised for
environmental or social issues in the media, purposely avoided engaging
in the discussion of issues impacting their industry through social media.
We actively avoid social media because it’s an area where interest
groups who wish to put out information, correct or incorrect, are able to
do so. Anything we put out is received with significant scepticism
(Extractive industry).
Another interviewee agreed, stating:
Social media gives people the opportunity to voice an opinion, whether
that opinion is factual or not, so from that perspective it can be
challenging (Agricultural industry).
Incorrect information is one thing, but it was also noted that social media
can turn quite ugly. One interviewee explained:
In terms of people threatening to blow my car up or harm my
kids, that we let go; there’s no point in responding. We get a lot
of trolls. Normal everyday people put some vitriolic stuff on
social media that they would never say to your face
(Extractive industry).
Besides business promotion generally and issues management, we also
queried our interviewees about using social media specifically to
communicate what they are doing related to environmental and social
10
practices. Internally, Facebook was used by many interviewees as an
effective communication tool:
Facebook is one of my main communication channels internally related
to sustainability. It’s a tool to make sure everyone knows what we’re
doing around sustainability and that gets them more involved
(Retail industry).
Externally, most businesses did not want to communicate sustainability
practices for fear of being criticised and that was true for both
environmental and social practices.
It is a conscious decision, we know there are a lot of things we
have to do better before we go out to our customers and say,
“hey look at us we’re doing a good job!” I can’t say we are
doing recycling properly across all our facilities. And the risk is
if someone found something wrong with what we are doing,
then it would all come crashing down (Retail industry).
We have a volunteer day, every employee gets a volunteer day and we
encourage staff to do that in teams. We have a 50% target and we did
52%, but we haven’t Tweeted about that because we are worried it
would be perceived badly. But we probably need to take a look at that
because it is good stuff and we do believe that by sharing that type of
information then you encourage other organisations to step up as well
(Telecommunications industry).
Social media is an emerging form of communication for business.
Interviewees used social media both internally and externally, but
expressed concern about how time consuming it was to do effectively.
In addition, companies did not want to externally communicate about
their social and environmental practices for fear of devaluing those
practices.
The next section examines the drivers and barriers to adopting
sustainability practices.
A number of interviewees felt that to communicate about environmental
and social initiatives was to de-value those initiatives.
We don’t communicate or promote those social initiatives. To be
honest, to promote those practices associated with the brand
is a bit…it lacks a degree of sincerity to my way of thinking. Some
people look at that kind of thing and are quite scathing and think there
really isn’t a sincere attempt to better outcomes for their workforce, but
rather they see it as a means to promote the business
(Consumer goods industry).
Not communicating about sustainability practices had repercussions.
One of the most effective ways for business to learn about best practice
regarding environmental and social practices is through case studies and
peer-to-peer information sharing through business associations and other
forum.
Drivers and Barriers to Adopting Sustainability
Practices
The motivation or drivers for businesses to adopt sustainability practices
has been tracked since 2003. As illustrated in Figure 5, the most
common driver for respondents was reputation and brand (65%). The
next most common drivers were employees (40%) and costs (40%).
According to one interviewee: “We are an export marketing company
based on the reputation of our brand” (Horticulture industry).
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Figure 5
Drivers to Adopting Environmental and Social Practices
2003-2013
Saving costs is a top driver for adopting sustainability practices, but as
shown in Figure 6, it is also the number one barrier for not adopting
practices, as cited by 70% of respondents. The next most common
barrier cited was lack of management time at 47%.
Two additional barriers were added to later surveys, but neither were
cited by many of the respondents. The first, “lack of metrics to establish
a business” case was ticked by only 15% of the respondents and the
second, “the culture of the organisation” was only noted by 7% of
respondents as a barrier.
Figure 6
Barriers to Adopting Environmental and Social Practices
2003-2013
One of the themes that emerged from the interviews was that adopting
social and environmental practices was not just related to the company’s
reputation and brand but the country’s as well. One interviewee in the
transport industry said, “New Zealand’s ‘clean, green’ brand is very
important to our business.”
Another interviewee explained the link between the driver of brand and
reputation and adopting practices because of employees:
Our biggest risk is our credibility, we wouldn’t be anything without that.
And in parallel, we wouldn’t be anything without our employees. To get
the best employees, in this space in particular, you have to be pretty
open about what you’re doing and give the opportunity for people to
chase their dreams internally and externally (Consulting industry).
The issue of cost and the business case for sustainability is discussed in
more detail in the section below entitled, “Turning Point for Action,”
where at what point costs turns from a driver to a barrier is examined.
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The following section provides an analysis of the study results related to
the role of government.
The Role of Government: The Search for Leadership
When the business case does not add up and there is little profit motive
to act (as in the case of carbon), then government is viewed as a
necessary catalyst for progress to occur in social and environmental
areas for business. Historically, regulatory pressure has not been cited in
the surveys as a strong driver for businesses in New Zealand. What little
pressure there had been, dropped further with the change from the
Labour-led to National-led government in 2008. As shown in Figure 5,
in 2003, 25% of businesses surveyed responded that regulatory pressure
was a driver for adopting social and environmental practices, but in 2013
that dropped to just 18%.
There is a stereotype that business does not want regulations, but
surprisingly in our interviewees we found a different narrative. One
interviewee explained:
There is no indication that there will be a real financial incentive
to undertake these measures. Regulation could be an incentive.
For example, the landfill tax has not been increased for seven
years. We are still at a figure that is 10% of what they charge
in Australia or Europe (Retail industry).
As the quote above suggests, interviewees were most interested in
government action to help make the business case viable. But not
everyone agreed that the government needed to do more:
This government has introduced more legislation, greater requirements
for environmental and health and safety than any government before it.
Which is not the perception. I believe the level of regulation is
appropriate (Extractive industry).
And some felt that their own internal drivers would be enough.
There’s a bit of a myth that farmers don’t care. In our sector, most of
these farms are inter-generational so concepts like passing it onto the
next generation are ingrained. A common thing is to say I want to leave
it better for my kids. When you pitch it as a stewardship concept rather
than a regulation concept, you tend to get a pretty positive response
(Agricultural industry).
While acknowledging the diversity of views, the more dominant theme
from the interviews was that business wanted government to step-up to
level the playing field, provide regulatory certainty, remove the free-rider
issue and protect New Zealand’s valuable clean green branding.
I do think as a country we are far behind where we should be in
this kind of space. So I do think a nudge from the government
would definitely help people make more long-term decisions as
opposed to just 12-month decisions. We’re so far behind other
countries in this space it’s actually quite embarrassing
sometimes. As a country we do need to do more
(Telecommunication industry).
Several companies also cited the influential role government could play
as a large purchaser of goods and services.
Drivers are not government, but consumers. The biggest impact
government can have is with their procurement policy, and it is not
lowest cost, but including the environmental considerations as part of the
equation (Services industry).
Other interviewees reported that they have been putting pressure on
government to act. For example, besides water and carbon, some
interviewees said there was a lack of government action on product
stewardship around e-waste and refrigerants.
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We are pressuring MfE on how to appropriately deal with
electronic products at the end of their life. The scale of the
problem for one organisation to deal with is way too costly and
commercially is just not viable. So we are keen to do
something, but we can’t afford to do it alone. So we’ve gone to
government saying, level the playing field (Retail industry).
In the end, interviewees were aware that if the business case is not
sufficient and government action is not there, then no progress is made.
And that is ultimately a business risk. The next section examines at
what point costs go from a driver to a barrier to adopting sustainability
practices.
The Turning Point for Action
To date, sustainability initiatives have been promoted on the basis of a
profit motive; making a “business case” where it was assumed that
leaders in change stood to have a market edge whilst the “laggards”
would eventually have to either follow or lose legitimacy. The argument
is consistent with the free market ideology that has prevailed in New
Zealand and elsewhere since the 1980s. Thus the burden has been on
business to see the value in making change toward greater sustainability.
As highlighted in Figure 6, 70% of respondents cited cost implications as
a barrier to adopting sustainability practices, at the same time, Figure 5
showed that 40% of respondents indicated cost management/reduction
was a driver. It is hard to know exactly when the cost of making a
sustainability change is outweighed by the financial benefits. Certainly,
there is a tipping point that businesses calculate for themselves.
There are a lot of things you could do that might be very costly. If it’s
too costly or the payback isn’t high enough we won’t do it, you have to
strike a balance; you have to trade it off to try to get some kind of sweet
spot (Health industry).
Not surprisingly, many sustainability decisions are triggered first by an
attractive cost/benefit calculation.
Environmental initiatives are based on economic returns for the business.
We don’t sit around and say, “How can we help the environment today?”
It might be a consequence of what we do, it’s not the reason for what
we do. Our reason for being, we employ 50 people. Our ultimate
objective is to have jobs for 50 people tomorrow. The environment is a
consequence not the reason (Transportation industry).
The business case for sustainability was a dominant driver:
Last year’s change of packaging was driven by a number of factors. One
was that we made two pieces of packaging into one. That’s waste
reduction. The change was driven by costs, but the environmental
impact is always taken into account. If the costs would have gone the
other way, we probably would have struggled to justify the change
(Food and beverage industry).
The business case for sustainability sometimes had longer payback times
compared to other initiatives and business normally operates on shortterm payback:
For us to tackle those environmental issues that may not have
efficiencies that go along with it, creates more of a challenge. A
shift in fuel type, or to give our staff one day off for
volunteering, has a more long-term benefit. I personally see
the benefit, but selling those to the business is very hard
because everyone works in short-time focused cycles, including
boards and government (Transport industry).
For some businesses, there was a growing awareness of sustainability’s
short-term benefits.
The smarter shareholders, particularly within the Board, they’re
increasingly seeing the long-term benefits of environmental management
and also definitely now seeing there are pretty quick short-term gains as
14
well, whether that’s energy management and electricity savings or fuel
savings. It’s both values and economic drivers. The financial drivers
have accelerated what we’ve been able to do (Retail industry).
Trade-offs among the three pillars of sustainability – social,
environmental and economic – are commonly understood as part of the
strategic calculation, however it is also clear that for most businesses,
economic trumps:
[A sustainability initiative] is really important that it is commercially
sustainable because that means its funding won’t be subject to a change
in chief executive or a change in the entity because they’ll say, I want to
keep doing this because it’s commercially the right thing to do
(Energy industry).
Although economic considerations took precedence, that weighting could
change within the business depending on how it was performing. One
interviewee explained:
Where the organisation is now, the value is seen as saving money.
Where previously it was a balanced decision among the three, it’s now
more about economic sustainability in terms of the focus and if it has
environmental or social benefit that’s great
(Telecommunications industry).
Risk was often incorporated into arguments about the business case.
The risks that interviewees noted were associated with poor media
publicity around unethical practices.
There were examples of companies going beyond the business case:
The certification has not led to any new business. It has been
disappointing in that respect. It’s unusual for an ICT company to be
getting environmental certifications. We did it because of the attitudes
and beliefs of the people involved in the business. The initiative is values
driven. I did think having certification would be useful in marketing, but
I wasn’t right. Hopefully one day it will
(Information and communication technology industry).
The discrepancy between cost as a driver and a barrier suggests that
while short term cost savings are recognised, the long term investment
that may be required to maximise cost reduction still poses a barrier.
This interpretation is consistent with one of the project’s overarching
findings that short term planning dominates businesses at the expense of
long term benefits.
Conclusion
The latest iteration of the 10-year study found that more than any other
issue, water has become more visible with greater concern about it as a
limited resource. However, businesses’ concern and sense of urgency
about water is not matched by action to individually tackle those
problems. Only 24% have set targets to reduce water use in their own
operations despite 72% of respondents being concerned about water
supply for New Zealand.
The sustainability slide is even worse for carbon. Due to a lack of
government action and the decreasing global price of carbon, some
businesses have stopped measuring and managing their carbon
footprint, while others put their carbon strategies on hold. A majority of
interviewees wanted government to step in to level the playing field and
provide regulatory predictability. This may be a useful message for the
New Zealand government as it prepares for the Paris climate change
talks in December.
The number one reason for adopting social and environmental practices
was to preserve the marketability of their brand and reputation, with
65% of respondents citing it as a motivator. Between carbon and water,
at least some New Zealand businesses are worried that the country is
putting its own “clean, green” brand – and associated economic benefits
– at risk.
15
Even when businesses did engage in sustainability practices, they were
often reluctant to talk about it. This appears to be yet another paradox:
companies are naturally expected to publicise their good works as much
as possible. Surprisingly though, there was a reluctance to communicate
their social and environmental practices, lest they be accused of being
self-promoting or even disingenuous. This finding was separate from
businesses who found promotion on social media too time consuming.
The findings make it clear that most businesses care about
environmental and social sustainability, with only about 15% considering
it “unimportant” (Figure 6). But it also is apparent that in most cases the
financial case for a particular sustainability action must be clear before
business will act. Cost was cited by 70% of survey respondents as the
top barrier to adopting sustainability practices. This is not a surprising
result, but rather a reminder that depending on financial drivers to
advance sustainability will only take us so far.
If business becomes pro-actively involved in political issues on the side of
sustainability, that could accelerate the transition to new paradigms, like
a low-carbon economy. Of course, the reverse may occur. Companies
may choose to continue playing on an uneven field, or they might
actively oppose change to the status quo.
It will be interesting to see which course businesses choose, because
what does not seem to be in dispute is that the pressure on business to
be more “sustainable” is only going to grow:
Industry will be held more accountable for either direct or
indirect environmental management, either through their own
plants or third party suppliers. There’s going to be more and
more scrutiny. I can only see it going one way
(Consumer goods industry).
The overall survey results show an increase in environmental and social
practices compared to 2010. Despite these results, sustainability is
described as being “on hold” because the increases are incremental, not
the type of change necessary for substantive action on issues like climate
change.
When the business case is not immediately clear, there is evidence of an
emerging shift with many businesses looking to government to take a
leadership role through “smart regulation.” Smart regulation means
government working closely with the key industry sectors that need
targets, strategies and enablers to transform their operations. Having
these targets in place will make it easier for business to innovate through
or plan around uncertainty (Sustainable Business Council, 2015).
While these expectations are not yet uniformly translating into wellarticulated demands, it is likely to happen, especially as New Zealand’s
brand comes under increasing threat and business opportunities are lost.
In the future, one novel measure of business’s commitment to
sustainability may be the degree to which they encourage government to
act when the market fails.
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Acknowledgements
* The authors gratefully acknowledge funding from the Marsden project: “Sustainability at the cross roads: examining the vulnerability of New
Zealand's global environmental positioning” (2010 – 2013). Additional non-financial research support was provided by the Sustainable Business
Network. The authors also thank Nathan Orr for his research assistance and Kevin Collins for his editorial assistance.
Publications from the research project to date include:
Reports




Lawrence, S.
& Collins, E.
(2004) Sustainability Practices of New Zealand Business,
Waikato Management School, URL:
/NR/exeres/B7C9F6A8-F452-4D5D-96AD-21E51B72511B.html
Collins, E., Lawrence, S., & Roper, J. (2007) Sustainability Practices of New Zealand Businesses in 2006, Waikato Management School,
www.management.ac.nz/sustainabilityreport.
Collins, E., Lawrence. S., Roper, J. and Haar J. (2010) Business Sustainability Practices During the Recession: The Growing Sustainability
Divide, Waikato Management School, http://cms.its.waikato.ac.nz/__data/assets/pdf_file/0008/68291/sustainabilitydivide.pdf.
Collins, E., Lawrence, S., Roper, J. & Haar, J. (2011) Sustainability and the role of the management accountant , Research Executive Summary
Series,
Vol.
7(14),
Chartered
Institute
of
Management
Accountants,
http://www.cimaglobal.com/Documents/Thought_leadership_docs/Sustainability%20and%20Climate%20Change/Managementcontrol_NZICA.pdf
Journal articles




Collins, E., Corner, P., Kearins, K., & Lawrence, S. (2004) Getting Serious About Voluntary Environmental Programmes. University Auckland
Business Review 6(2), 57-65.
Collins, E., & Lawrence, S. (2005) Sustainability practices of New Zealand business - A survey. The Corporate Citizen, 5(3), 22-23.
Lawrence, S., Collins, E., Pavlovich, K., and Murugesh, A. (2006) Sustainability practices of SMEs: the case of New Zealand. Business Strategy
and the Environment, 15(4), 242-257.
Collins, E., Lawrence, S., & Pavlovich, K., and Ryan, C. (2007) Business Networks and the Uptake of Sustainability Practices in Small and
Medium-Sized Enterprises: The Case of New Zealand. Journal of Cleaner Production, 15(8&9), 729-740.
17



Collins, E., Roper, J. & Lawrence, S. (2010) Sustainability Practices: Trends in New Zealand Businesses. Business Strategy and the
Environment, 19(8): 479-494.
Lawrence, S., Botes, V., Collins, E., & Roper, J. (2013) Does accounting construct the identity of firms as purely self-interested or as socially
responsible? Meditari Accountancy Research, 21, 2, 144-160.
Collins, E., Duppati, G., & Rath, A. K. (2013) Sustainability practices, drivers and barriers: A New Zealand/India comparison. Journal of
Commerce & Business Studies, 1, 2, 31-41.
Book Chapters


Lawrence, S., Collins, E. & Roper, J. (2010). Expanding Responsibilities of Corporate Governance: The Incorporation of CSR, in Mishra R.K.,
Jhunjhunwala S., and Sahay M., (Eds) Corporate Governance: Beyond Boundaries (pp.9-25). New Delhi, India: Macmillan Publishers India Ltd,
Advanced Research Series.
Collins, E., Dickie, C. & Weber, P. (2010). New Zealand & Australia: A New Zealand and Australian Overview of Ethics and Sustainability in
SMEs. In Spence, L.J. & Painter-Morland, M. (Eds), Ethics in Small and Medium Sized Enterprises: A Global Commentary (pp. 85-97).
Dordecht: ISBEE Book Series, Springer.
18
References
Australian Centre for Corporate Social Responsibility (2014). The State of CSR in Australia and New Zealand Annual Review 2014.
http://accsr.com.au/app/uploads/2015/04/ACCSR_State_of_CSR_2014_FINAL020614.pdf
Accessed:
Ireland, J. (2014). Better Business Better Future 2014. A Colmar Brunton Report. Accessed: http://www.colmarbrunton.co.nz/index.php/polls-andsurveys/better-business-better-future/better-business-better-world-report
Makower, J. (2015). State of Green Business 2015. Greenbiz.com Accessed: https://www.greenbiz.com/report/state-green-business-report-2015
Ministry for the Environment (2014). Climate change impacts in New Zealand.
affects-nz/climate-change-impacts
Accessed: www.mfe.govt.nz/climate-change/how-climate-change-
Sustainable Business Council (3 June 2015). Submission by the Sustainable Business Council to the Ministry for Environment on New Zealand’s Climate
Change Target Discussion Document.
Accessed: http://www.sbc.org.nz/__data/assets/pdf_file/0012/104142/SBC-Climate-SubmissionFINAL.pdf
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