Tuesday, March 5, 2024

Heed the net-zero drumbeat, Hatton urges

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Simply taking a ‘do nothing’ approach won’t work, says PwC climate change lead.
NZ agriculture risks missing out on markets if it doesn’t move quickly, PwC’s sustainability and climate change director Dr Victoria Hatton says.
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The drumbeat for net carbon zero agriculture is getting louder by the month, driven by the enormous task confronting the world to reduce its carbon intensity by over half in only eight short years.

“If we do not decouple emissions from growth we will not get there,” PwC’s sustainability and climate change director Dr Victoria Hatton told delegates at the 2035 Oceania Summit.

While claiming to be a firm optimist, Hatton said the opportunity for New Zealand agriculture is being driven as much by risk and exposure as it is by investor and consumer interest.

The recent Parliamentary Commissioner for the Environment’s report on carbon offsetting highlighted how taking a “do nothing” approach to gross emissions and simply planting to offset simply is not possible, given it would require almost half the pastoral land in New Zealand to be turned into forestry.

Consumer sentiment, financial expectations and regulations are now all interacting to turn the tide towards low carbon products. This is also driven by the upfront reality of already having to deal with physical risks of climate change now in play globally, Hatton said.

Agriculture sits across a spectrum of risk, depending upon its response. 

At its worst, a “do nothing” approach will only destroy value through increased exposure to higher carbon prices.

Value preservation will be achieved by taking climate risk mitigation measures, to avoid fines and regulatory costs like European Union carbon border charges, likely to come soon. 

The gold standard on the spectrum is value creation, through achieving true net-zero transformation.

This delivers additional market share and new customer segments.

Hatton cited United Kingdom food chain Morrisons as an early mover aiming to be net carbon zero for its beef by 2030, five years ahead of the industry as a whole.

“From a NZ perspective we may be blocked out then from their market. If we do not turn that to an opportunity, then we could miss out.”

Hatton recently berated the NZ beef industry for its earlier failure to entirely capture the grass-fed claim, having sat on it for decades. 

She has also cautioned that NZ’s “carbon neutral” beef being marketed in the United States will not gain the same traction in Europe, where net carbon zero is the target.

However, it is not too late, with NZ proving good at developing new products, and the world an ideal Petrie dish for putting them out there.

She urged processors to look beyond their immediate manufacturing silo, further downstream at packaging (plastics), logistics (transportation emissions) and final product use including end of life and wastage, a big part of the sector’s emissions loss.

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