NZ business lagging behind in energy conservation

14 May 2007

New Zealand businesses lagging behind in energy conservation

New Zealand businesses are lagging behind other economies in managing energy and environmental issues, according to the latest findings from the Grant Thornton International Business Report (IBR).

New Zealand is ranked 25th out of 32 economies* surveyed in terms of action taken to prepare for ever increasing energy prices globally and the need to conserve energy.

The Grant Thornton survey shows that energy and raw material costs are an increasing worry for global businesses but New Zealand companies are more concerned about increasing staff costs.

The biggest worry for businesses globally are raw material costs with 44% of businesses identifying these as having a major impact on cost pressures in the next twelve months, followed by 41% who were concerned about staff costs, 37% about energy costs and 34% about transport costs. Property costs (15%) are expected to have a lesser impact over the coming year.

By contrast, New Zealand businesses are most concerned about increasing staff costs (49%), followed by raw material costs (34%), with energy costs perceived as having a lesser impact on cost pressures over the next 12 months (25%). Only three other countries (out of 32 surveyed) ranked energy costs as less important as a cost driver over the coming year.

Respondents were also measured by whether they had undertaken energy and environmental initiatives namely; if they had undertaken an energy review, reduced energy consumption, put measures in place to turn off electrical equipment, invested in energy saving equipment, invested in alternative fuel/energy supplies, and considered relocating to reduce transportation costs.

Grant Thornton New Zealand spokesperson Peter Sherwin says there is a simple clear message from the survey findings.

“Unless environmental factors such as energy costs become issues that significantly affect a company’s profitability, there is no incentive for it to take action and reduce its impact on the environment,” he says.

“This is clearly evident in New Zealand where only 25% of businesses ranked energy as having a major impact on cost pressures in the coming year and at the same time New Zealand was ranked 25th (out of 32 countries) in terms of taking action to prepare for ever increasing energy prices and the need to conserve energy.”

One country bucking the trend is Australia, where businesses are undertaking more energy and environmental initiatives than New Zealand, even while it has the lowest ranking of all 32 countries in terms of expectations that energy costs will have a major impact on cost pressures over the next 12 months.

Mr Sherwin says New Zealand could take a leaf out the Australian book and benefit.

“Globally, we are at a tipping point with regard to environmental management. Companies that don’t take action to mitigate energy costs risk harming their long-term competitiveness,” he says.

There is also a role for governments to look at the long-term competitiveness of their economies and to factor energy and raw material costs into the equation, says Mr Sherwin.

The Grant Thornton International Business Report says of the potential options to reverse or at least curb the rate of growth in carbon dioxide emissions (refer page 5), renewable energy sources such as wave, river and tidal turbines, wind power, solar energy and biomass are relatively uncontroversial and should perhaps be given primary consideration.

ENDS

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