Law firm Chapman Tripp has just published a report titled, Protecting New Zealand’s Competitive Advantage: A snapshot of global sustainability reporting and trade trends

It probably won’t be read by many of Hawke’s Bay’s farmers and growers, who are more immediately focused on immediate local issues like the next rainfall, fertiliser costs, low commodity prices and mounting debt.

But it warns clearly of a significant ‘threat’ ahead for NZ exporters … not just exporters of agricultural products, but since our regional economy is predominantly farm export driven, the report has special relevance to HB.

The report has compiled for the first time in one place the myriad of overseas regulations around ensuring sustainability and reducing climate footprints – regulations that apply to the goods NZ/HB exports.

While farm sector lobbyists and MPs bemoan the Wellington- and regional council-initiated regulatory hurdles and environmental requirements they claim unduly constrain farmers and growers from making money the old-fashioned way, they ‘ain’t seen nothing yet’.

What the Chapman Tripp report documents is a blizzard of ESG requirements – standards, targets and reporting rules that overseas private customers and governments are incorporating into their business contracts and trade agreements.

And these overseas requirements are generally significantly more demanding than the ‘domestic’ requirements promulgated here.

If NZ/HB growers and farmers are to retain overseas market and sales, those are the rules and expectations that must be satisfied.

The report indicates that 60% of world GDP is now subject to mandatory climate-related disclosures.  These can be imposed country by country or broadly as in the case of the European Union. While we are naturally eager to enter trade agreements that expand NZ’s market access, these agreements now impose tougher and tougher environmental (and other – animal welfare, worker rights, etc) conditions on suppliers.

For example: “Both the UK-NZ and the EU-NZ Free Trade Agreements create binding obligations on New Zealand to uphold our international climate change commitments. These provisions are subject to dispute settlement mechanisms, meaning that non-compliance could theoretically attract trade sanctions …”

“With 80% of New Zealand’s exports by value going to markets that have mandatory ESG reporting in force or proposed, businesses who want to proactively manage ESG trade risk would do well to stay attuned to these developments.”

And regarding private sector frameworks (e.g., international supermarkets and bulk purchasers like Nestle) the report says:

“To be well positioned as preferred suppliers to corporates adopting these voluntary frameworks, New Zealand exporters will need to anticipate and respond to voluntary market actions as well as regulatory disclosure obligations.”

Chapman Tripp co-author Nicola Swan says the extent of the changes and how fast they are happening may come as a surprise to some. “The fact that more than 80% of New Zealand’s exports by value are now going to countries with CRD either in force or proposed presents a challenge to exporters and their supply chains. New Zealand is heavily dependent on trade and offshore capital – we cannot afford to fall behind on increasing global demands for reporting on climate risk, GHG emissions and broader ESG capability.”

And it’s not just reporting, it’s meeting standards and targets.

It’s up to Government officials – especially Trade and Agriculture Minister Todd McClay – and private sector agbiz leaders to educate the rank and file on the realities of how the world of food exporting is evolving. Supporting a retreat to weakened domestic environmental standards that can’t cut the mustard overseas will reduce NZ to a two-island economy.

If you’re worried enough, you can access the report here.


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