As New Zealand’s farming sector argues about how to price its greenhouse gas emissions, PwC’s director of sustainability and climate change warns we’ll be left behind the rest of the world if we don’t act soon.
The professional services business has offices in 155 countries, giving it a pretty good view of global trends and challenges.
Dr Victoria Hatton says NZ is looking increasingly siloed in its thinking and, despite having a head start in the sustainable farming game, we’re being overtaken by the European Union and United Kingdom.
There, the likes of Nestlé and Danone have moved on from challenging carbon-equivalence metrics and are simply getting on with meeting consumer demand.
She says net-zero is the goal for these businesses, whereas here carbon-neutral, a less robust equation, is often the target.
Nestlé has a goal of becoming net-zero by 2050, not just in its own operations, but right throughout the supply chain, which includes farmers.
Only 5% of Nestlé’s total greenhouse gases come from its own operations. In contrast, 95% come from the supply chain, from activities like farming or shipping.
Fonterra sells dairy products to Nestlé, so the NZ co-op’s sustainability push is about more than social licence, it’s about good business.
Interestingly, in recent commentary Jarden voiced concerns about that investment in sustainability, saying more detail is needed on the specifics of the spend.
That’s the job of market watchers, of course, but it does highlight another issue food processors face when trying to build a business that’s sustainable in the long-term.
From a social and environmental perspective, sustainability is a cost of entry. If you want to sell to Nestlé, you need to tick the boxes. If you want your food in Tesco, you need to pass the test they’ve implemented – one that their customers demand.
But while Europe and the UK are getting on with the job, in NZ the path can often be blocked by the quarterly demands of shareholders, who often clamour for short-term performance ahead of long-term resilience.
There is, understandably, a fear of the upfront costs involved in making changes to farm businesses to meet the market, especially in a time of volatile markets and steeply rising input costs.
But it’s important to take a hard look at the opportunity cost.
Maintaining the status quo is a decision, one that closes the door on other opportunities. What might we be missing out on by dithering on emissions pricing and sector-wide sustainability targets?
PwC thinks we’ll miss out on a lot of value, despite the head start we’ve been given by the excellent farming systems we’ve built over decades.
Some think they may be wrong, that the world will always need more and more food and if we reduce production slightly it’ll be made up by worse producers.
In the short-term that’s probably true, but further down the track, will we miss out on the value others are chasing right now?
Hatton says that while we argue among ourselves about the path forward, our relevance in the high-value food world diminishes.
And she reckons we have 18-24 months to get the house in order if we want to be suppliers of high-quality milk and meat to discerning customers.
Maybe the time for talking is over and it’s time for action.
