Embargoed until 12.00 noon
Friday 7 December 2007

Rt Hon Helen Clark
Prime Minister

Address to
New Zealand Business Council for Sustainable Development

Deloitte House
8 Nelson Street, Auckland

12.00 noon

Friday 7 December 2007

Thank you for the invitation to address this meeting of the New Zealand Business Council for Sustainable Development.

I recall attending the event which launched this Council in 1999. The initiative was led by Mike Andrews of Fletcher Challenge and Stephen Tindall of The Warehouse, who both believed that businesses should be taking environmental and social concerns into consideration when making business decisions.

From that small beginning eight years ago, this Business Council has become an authoritative and influential voice in our business community.

I understand that your membership now totals 61 companies, employing 60,000 people, and with annual sales of $44 billion, or around a quarter of New Zealand’s annual GDP.

The growth in your membership reflects the changing tide of opinion on sustainability and on climate change issues.

At home and abroad, more and more consumers are interested in not just what a product or service does, but also in how it is produced. The power of consumers to drive demand for sustainable products and services, and bypass those which are produced unsustainably, is a force for change we would be foolish to ignore.

I say that because we are the most geographically remote western country, transporting goods over vast distances to markets, and encouraging people to visit our long haul destination for the experience of a life time. Prima facie in today’s world, that will raise questions about carbon footprints which we must be able to answer.

For New Zealand to remain a viable and prosperous nation in the 21st century, we must be sustainable – or we will face long term disadvantage to our key sectors in our key markets.

For us, sustainability and prosperity will go hand in hand.

Making New Zealand sustainable is a challenge requiring a response from all sectors of the community. In meeting it, government, business, and community each have special responsibilities and a common interest.

It is clearly the responsibility of government to give leadership. This year the Labour-led Government has put forward a comprehensive package of policies and strategies to put this country on the path to sustainability, including :

- the proposed Emissions Trading Scheme

- the New Zealand Energy Strategy

- the New Zealand Energy Efficiency and Conservation Strategy

- strengthening the provisions of the Building Code

- the introduction of sustainable purchasing guidelines for the public sector,
and, much much more.

Our programme is, by any standards, ambitious. It reflects our government’s belief that pursuing sustainability is not only the right thing to do, but is also a strategic investment in New Zealand’s overall future.

Every day people are making countless purchasing decisions, business decisions, and lifestyle choices. Encouraging our many hundreds of thousands of businesses and households to pursue sustainable options will play a big part in making New Zealand overall more sustainable.

The policies and strategies announced to date will have a mix of direct and indirect effects on businesses and households.

The vast majority of businesses will not themselves be directly engaged in the Emissions Trading Scheme. It is estimated that fewer than 200 firms will actually be ‘points of obligation’.

But of course we will all be indirectly incentivised as the cost of greenhouse gas emissions is reflected in prices through the Emissions Trading Scheme.

Beyond that, there are many things we can do to encourage sustainability, and this Business Council has made a lot of suggestions about what they might be.

For example, in your submission on the draft New Zealand Energy Efficiency and Conservation Strategy, you called for measures to accelerate the retrofitting of the existing housing stock to get greater energy efficiency, and for cash incentives and penalties to influence the purchase of fuel efficient vehicles. You also supported proposals to improve the amount of information available to consumers, and the use of public procurement to kick-start new markets for sustainable products.

I am pleased to say that many of these measures have been adopted.

For example, in this year’s budget $72.4 million was provided for a bigger programme of support for insulating older homes.

We are also stepping up the provision of information and advice to consumers on energy efficient products and services, including fuel efficiency labelling for vehicles.

We are providing direct incentives to energy intensive businesses to improve commercial and industrial energy efficiency.

And earlier this week I launched a new website which promotes each one of us taking new steps for sustainability – whether they be through recycling, using energy efficient light bulbs, or walking for short trips rather than using the car.

But could we do more ?

This Council has, for example, proposed greater use of direct incentives to households to encourage the purchase of energy efficient, low-emission vehicles and appliances, or to scrap older inefficient models.

That’s an interesting idea, and your research suggests it would be widely supported by the public.

To date we have supported small pilot programmes to incentivise people to scrap old, polluting cars. Extended trials are planned for 2008 to provide information for the development of future policies.

An area where we have identified a major gap is between strong business interest in sustainability and a relatively low adoption of sustainable business practices.

As part of the government’s Business Partnerships for Sustainability Initiative, we are working on how to support improved business capability in this area. The three key areas we believe need support are :

- helping sustainable businesses access new markets here and overseas

- developing sustainability strategies and action plans for business sectors, and

- working with business organisations, such as this Council and the Chambers of Commerce, and through the Sustainable Business Network, to enhance business sustainability programmes. For example, the Network has recently received a big funding increase to bring many more businesses into its ‘Get Sustainable Challenge’.

At the broader strategic level on sustainability and climate change response, it’s important to have an ongoing quality dialogue between government and business. The Growth and Innovation Advisory Board, chaired by Stephen Tindall, has provided officials with suggestions on how this can be achieved, and identified areas like energy policy which should be to the fore.

We value organisations like this Council making suggestions about how New Zealand can make progress on sustainability.

It’s vital for government to be both listening and consulting widely. The policies and strategies for sustainability being launched will shape our economy and society long into the future.

Wide ranging consultations have been undertaken in the development of the proposed Emissions Trading Scheme, the New Zealand Energy Strategy, and the New Zealand Energy Efficiency and Conservation Strategy.

Prior to the development of the Emissions Trading Scheme, there was consultation with business and other stakeholders on the best mix of options to address climate change.

The view of most of those consulted was that an emissions trading system would offer the most effective, fairest, and least-cost option for reducing New Zealand’s greenhouse gas emissions.

Since the release of the proposed scheme, officials have been working closely with business groups and other stakeholders on the proposals. They met with over 2000 groups and individuals in the six weeks following the release. Discussion will continue while the legislation is before Parliament, and beyond, as we phase in the rules for each sector over the next five years.

The Leadership Forum, chaired by Stephen Tindall has made a substantial contribution to the framing of the emissions trading legislation, and will continue to provide direct advice to government into 2008. I would like to take this opportunity to thank Stephen and members of the group for their valuable work on this very important policy.

As you know I have issued a challenge to New Zealand – that we could become the world’s first truly sustainable nation, and that we could even aspire to be a carbon neutral nation.

I believe that in time our quest for sustainability will become a defining characteristic of New Zealand’s unique national identity - just as being nuclear free has defined us for more than two decades. Working to become truly sustainable is also a case of thinking globally and acting locally.

As I travel around New Zealand, I see countless examples of businesses and communities working to incorporate sustainability principles into everything they do. There are many examples of outstanding leadership – from our largest to our smallest companies.

The groundswell of support for action is being reflected in opinion surveys like the Business Council’s own Shape New Zealand polling, which found that 55 per cent of New Zealanders surveyed believe that we should be global leaders in tackling climate change.

I believe the benefits for New Zealand of being proactive on sustainability are substantial. How nations respond to these challenges will impact directly on their future wellbeing. Those who don’t act will be seen to be part of the problem, not part of the solution.

For New Zealand not to act would be to sacrifice our priceless clean and green and 100 per cent pure image – and with it our high value markets. That’s not an option.

By acting, we get the chance to shape our own future. For example, the leading role we are taking on these issues has led to us being invited into the International Carbon Action Partnership which will play a key role in developing the carbon trading markets of the future.

By being proactive, we are also able to have more say in international negotiations, such as those taking place in Bali now for the post 2012 arrangements on climate change.

These negotiations will set the roadmap and the terms of reference for the international agreement which will need to succeed the Kyoto Protocol.

We want to see all major greenhouse gas emitters included in a more comprehensive international agreement.

We also want the terms of reference to cover :

- how to adapt to the effects of climate change

- the use of existing and developing technology

- avoiding deforestation

- taking into account the negative impacts of climate change policies on the economies of other countries

- and creating and maintaining markets for carbon credits.

There is strong international interest in New Zealand’s proposed emissions trading scheme and our work on reducing greenhouse gas emissions from pastoral agriculture. This interest, and New Zealand’s reputation as a progressive and constructive participant in efforts to tackle climate change, puts us in a good position in the Bali negotiations.

Climate change and broader sustainability issues are now dominating international meetings from Davos to APEC – and election campaigns too.

Just two weeks ago, Labour was elected in Australia on a platform in which ratification of the Kyoto Protocol was central. The new Prime Minister Kevin Rudd will travel to Bali next week to emphasise his new government’s commitment to tackling climate change. I will be discussing the Bali meeting, and many other issues of interest to both our governments, with Mr Rudd in Brisbane on Sunday.

At the East Asia Summit which I attended in Singapore almost two weeks ago, regional leaders, including from three of the world’s four most populous countries - China, India and Indonesia - expressed support for a long-term global emissions reduction goal to pave the way for the post 2012 climate change arrangements. They also agreed to work towards increasing forest cover in the region by at least fifteen million hectares by 2020. There was a good outcome on climate change at the Commonwealth Heads of Government Summit in Uganda too.

So internationally, a lot of momentum is building on these issues.

Here at home, the message from government is that we are working to make sustainability integral to the way our economy and society works.

In government we can lead in our own practices; we can legislate and regulate, and we can practise sustainable procurement. Business too can lead by integrating sustainability principles into its business model.

I know that members of the Business Council are already walking the talk, and demonstrating how sustainability can be a core business value of the 21st century. I congratulate you on your leadership.

There are many encouraging examples of sustainability now driving strategies across sectors like tourism, aquaculture, and viticulture. There is a fast growing appreciation in the primary sectors of the importance of sustainability in retaining high value markets.

In government we see the implementation of sustainability strategies as integral to driving the transformation of the New Zealand economy to one of higher value. Without a commitment to sustainability, we will surely be left behind in a world where affluent consumers are increasingly making ethical choices.

So, lets keep working together on building a sustainable economy, on achieving the wider adoption of sustainable business practices; and on designing the emissions trading markets of the future.

In this way, we can ensure New Zealand’s future as a prosperous, innovative, inclusive, and sustainable nation.

ENDS

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