Simon Millar

Sustainability thinking in New Zealand needs to shift from regarding it as a costly marketing line item to being central to creating a healthier, wealthier future for the country, according to Pure Advantage chief executive Simon Millar.

The not-for-profit organisation is a corporate think-tank founded in 2012 by international fitness entrepreneur and former Olympian Phillip Mills. It aims to show leadership in sustainable thinking, something Millar says is lacking at the government level and lagging in the business world.

Millar returned to NZ last year to take up the role with Pure Advantage after many years working in the corporate world in the US, as well as undertaking postgraduate studies in environmental science and systems thinking, and gaining LEED Green Associate status.

“I came back to NZ thinking of it as so clean and green, and then realised we weren’t,” he says.

The “essence” of green is there in the corporate world’s awareness of sustainability, Millar says, but most companies are not putting that awareness into how they innovate or do business.

The government is not helping either, he says, because it has such a pronounced aversion even to the word “sustainable”.

Research says green will generate long-term economic advantages

As his organisation sees it, NZ is missing out on major opportunities.

As part of its agenda to promote the business case for green thinking in both business and policy, it commissioned research by Vivid Research at the London School of Economics and from the University of Auckland.

The first report, New Zealand’s Position in the Green Race, was focused on the role the private sector has to play in green growth. The second report, Green Growth: Opportunities for New Zealand brings together the nation’s key economic advantages with areas of environmental performance. The message of the research is that it will take leadership by big business and politicians, significant investment and policy change to accelerate momentum.

The organisation has identified six sectors where NZ has existing advantages that can be built on: agritech, biodiversity, bio-products, housing, renewable energy, smart grid, and waste to value.

Millar says PA’s thought leadership agenda is about demonstrating systems thinking through telling the stories of innovation and opportunity. It also contributes to policy dialogues, is working with academic researchers, networking with other sustainability organisations and has plans to bring in a major sustainability leader from the US to build the momentum through a series of talks.

“We want to tell the positive, optimistic stories and focus on the interconnection between the business community and the central and local governments, and lead the bull down the field,” Millar says.

Climate change needs tackling

Millar says there needs to be a stronger climate change response in NZ, and that it has been easy for the citizens to feel “complacent” because of the nation’s majority share of renewable energy in the electricity mix.

However, the dairy industry and transport are both high emissions sectors, and overall the nation is slipping backwards on emissions levels, he says.

Big issues – offshore CEOs, selling off IP and capital constraints

One of the issues that holds many NZ firms back is there are few companies where the CEO has a strong voice and ownership of the company’s NZ operations, Millar says.

In the majority of cases, the big firms are Australasian or European and the CEO is based offshore.

There is also a challenge around investment in research and development and investment in commercialising home-grown clean tech and other innovations.

“We are capital constrained in terms of scalability in innovation, especially in the clean tech space,” Millar says.

The need for investment in R&D is crucial, he says, and the trend of selling IP offshore also needs to change.

Some sectors are getting it

On the positive side, many organisations are “getting more comfortable with talking about sustainability” and seeing that their business adopting green growth thinking is intrinsically adding value to their products.

Millar says this is particularly true in the dairy industry, and increasingly so in the tourism sector, which has now overtaken dairy in terms of being the major contributor to NZ’s GDP.

Air New Zealand is an example, he says. It has been focusing more on sustainability and will be announcing a new sustainability framework next week.

There are some questions, however, raised by promoting NZ as a green tourism destination. Such as, “Are our rivers, streams and beaches really, really clean?

“And how healthy is our biodiversity?”

That biodiversity, known for its tourist-pulling power, is eroding on a daily basis, Millar says.

Systems thinking the way forward

The big problem is that NZ still doesn’t look at sustainability as a “systems approach”, he says.

“It is seen as a marketing line item and that it will cost something rather than seen from the long view.”

This includes neglect around issues such as toxins in products, unsustainable elements in the supply chain and no cohesive approach to materials stewardship through recycling.

In the financial sector there is also a lack of sustainability focus.

“There are no green investment funds in NZ that I’m aware of,” Millar says. And not only are there no specific green funds, there’s a shortage of people with the skills to enhance sustainability in portfolios.

Millar says a “very large fund entity” recently looked to hire a responsible investment manager, but couldn’t find one in NZ; nor could they find a local recruitment company that even had that type of role on their list, and when they did advertise, not one suitable applicant was found.

“Sustainability isn’t front and centre for us but it should be,” he says.

Stable is not as good as growth

Policy language for example, talks about a “stable economy”.

“But a stable economy sits in one place, whereas a sustainable economy is growing for the long term,” Millar says.

“The policy environment says there is a cost to act [on climate change], but our message is there is a cost for inaction. We should look at it as an investment in opportunities for the future.”

How the built environment could provide leadership

PA is doing quite a lot of work in the area of housing.

“There are advantages if people are living in healthier, more sustainable homes – but they are not [currently]. We have a lot of sick people here.”

Millar says the contrast was enormous between the house he had in California – which was energy efficient, thermally comfortable and well sealed – and the “horrendous” house he now rents in NZ.

And fixing the issues with leaky, draughty, poorly performing homes is not a priority for most people.

“The only thing people are obsessed with is adding a band-aid, like, add another heater.

“Green building is seen almost as a luxury.”

Two other factors are holding back the greening of the residential sector, he says: the high mark-up on products and materials compared to the rest of the world, and the lack of scale, as NZ has very few large development tracts that can implement innovations such as offsite construction at scale.

Millar says the NZ government could be doing more to lead the way, if it adopted a policy similar to the US government, where every new public building or government building retrofit must achieve a LEED rating. In NZ the equivalent would be a Green Star rating from the NZ Green Building Council.

“It would be wonderful in NZ if the central and local governments did that for all schools, hospitals, and public buildings – imagine the signal that would send,” he says.

“If public and community buildings were built to [Green Star] standards, using local materials, local labour and renewable energy, that is a huge opportunity to show leadership and create signature examples.”

  • Pure Advantage is looking for a responsible funds manager interested in working for a large Kiwi funds entity. Get in touch here for further details.