Clean technology: NZ's agents of change

BY MARK REVINGTON

Vision isn't a word Rob Fyfe likes to use. Air New Zealand's chief executive prefers the word 'belief'. That is what it took to get Air New Zealand named airline of the year by Air Transport World magazine in January, he tells Unlimited magazine.

"We didn't get there by saying 'here is the strategy, if we tick all these boxes, we will become the best airline in the world'. We said 'we would continually look for the opportunities to enhance our status with a strong belief that we can become the best airline in the world by being uniquely Kiwi'."

Top New Zealand businessmen are consummate brand builders and united by a common belief: that New Zealand is looking a gift horse in the mouth by viewing the world's inexorable move towards a low-carbon economy as a cost, rather than an economic opportunity. 

Last year, when Sir Stephen Tindall spoke at the 10th anniversary dinner of the New Zealand Council for Sustainable Business Development, an organisation he helped establish, he touched on the issue of food miles and the focus of UK retailers on the cost of carbon.

Soon after Tindall got a call from Phillip Mills, chairman of Les Mills International. "He said, 'why not have a chat about starting something up, get a few more people focused on cleantech'," says Tindall. "I think that was the genesis of it."

It was decided that a dinner would be organised as the first step. A loose plan was agreed on and the enlistment of like-minded capitalists began. Geoff Ross, founder of vodka company 42 Below, had written an opinion piece, published in the New Zealand Herald, in which he said it wasn't good enough for New Zealand to be a fast follower when it came to pricing carbon. Mills gave him a call and the next thing you know, Ross is on board the lobby group.

Rob Fenwick, co-founder of Living Earth, which turns waste into compost, is a family friend of Mills. Fenwick showed skill in combining business and politics - helping to found the Bluegreens, the National Party's advisory group on environmental affairs.

Sir George Fistonich, who built Villa Maria into New Zealand's largest independently owned winery, is quite simply a visionary. He founded Villa Maria at the age of 18, against the advice of his father at a time when port and sherry sales ruled supreme and the wine industry was almost non-existent.

Years later he went against the grain again when Villa Maria became the first major wine company in the world to move its entire production to screw tops. Tindall, of course, founded The Warehouse and built it into a billion dollar company before stepping down as managing director in 2001 to focus on the Tindall Foundation and his investment company K1W1.

Mills built a remarkable international fitness empire based on packaging innovative gym programmes and selling them around the globe. Jeremy Moon has built Icebreaker into a globally recognised brand. Among the group are several former Entrepreneurs of the Year, several World Class New Zealanders and a couple of knights.

There are others involved behind the scenes, but you could consider these men core members of a movement that wants New Zealand to investigate the business case for a change to a low-carbon economy.

Over a number of dinners and meetings, which began late last year, their concern crystallised  into an informal lobby group, which has attracted support from a couple of hundred CEOs and held talks with the government around a possible taskforce.

The lobby group appears to have the ear of at least some in Government. When members of the group met Prime Minister John Key for the first time, at Villa Maria's Mangere headquarters, Key was positive, says Mills.

"He got it." They have met Environment Minister Nick Smith and Climate Change Negotiations Minister Tim Groser. Mills says they have messages of support from a couple of hundred CEOs around the country.

Their case? That clean technology is an economic opportunity for New Zealand - a chance to achieve the sort of growth and knowledge-led economy that so many people have been banging on about, while improving the environment and enhancing New Zealand's clean, green image. Many pieces of the jigsaw are in place.

Every time you turn around another Kiwi company is doing something smart in the cleantech sector, from turning algae into energy to developing new geothermal power stations. It's time to take the conversation on cleantech mainstream, the lobby group believes.

It comes in several flavours - cleantech and greentech are just some of the labels - but the premise is simple. The world economy grew in the 20th century on the back of a carbon economy, fuelled by cheap oil.

The megatrend of the 21st century will be a low-carbon economy. The transformation that we need, the lobby group says, from oil-fired growth into clean technology, is predicted to be the largest economic transformation the world has seen since the industrial revolution.

And while countries have trouble on the world stage finding agreement on what to do about climate change, at home they're going gangbusters to invest in clean technology. In business, the train is leaving the station and picking up speed. A recent PricewaterhouseCoopers' (PwC) global CEO survey found three in five chief executives preparing for the impact of climate change.

What are we doing here in New Zealand? We have been locked into a debate in which one side says moving towards a low-carbon economy will mean an unpalatable cost for business, especially in the wake of the global recession.

The other side sees a change coming and argues that the sooner we position ourselves, the better chance we will have to gain a competitive advantage. Bury our heads in the sand and we risk being left behind, forever locked into a cycle of low growth, sliding further and further down that often-quoted OECD wealth table like it is a greasy pole.

It has been said that consumers drive the demand to reduce carbon through choosing goods produced by companies with an eye on sustainability, while governments provide structure and policy. In the middle there is money to be made while making the world a better place. There's a problem with that?

There is definitely fear in the business community around the cost of carbon, says PwC partner Julia Hoare. And ignorance. Hoare, who leads the company's sustainability and climate change team, is amazed by the number of competent business people she meets who seem unaware the world is moving towards a low-carbon economy - one where carbon will be a cost on companies and economies.

"Companies are rightly worried about viability and so they are resistant to change, but when people talk about not wanting New Zealand to be a leader and developing countries not doing anything to price carbon, then that is absolute rubbish.

"Look at countries like Korea, which is racing ahead. It has introduced tax breaks for cleantech and is really focused. China might not be committing globally on emissions, but internally it has a huge focus on this area."

New Zealand's trading future lies with Asia, says Hoare, and we need to be cognisant of what is happening on a world stage. "At the moment we are sheltered and closing our minds."

New Zealand's emissions trading scheme (ETS) is the elephant in the room. Due to be implemented on 1 July, it has created about as much hot air as the nation's dairy herds.

Air New Zealand's Fyfe has encountered plenty of naysayers. "It is not the only mechanism and personally I am not sure the ETS is the right mechanism, but that is not the point. We can debate what is right and wrong and do that for another 10 years. Ultimately you have to put a marker in the sand and move forward. Accept it isn't perfect but it does allow us some certainty in business to make investment decisions and make choices.

"When you are living in a void of uncertainty you make very inefficient and ineffectual decisions, because you are always hedging your bets. If you spend all your time hedging your bets, you're not harnessing and focusing your resources and efforts on the way forward. That is unproductive and dissipates that leadership opportunity."

Business New Zealand, which is the largest grouping of business interests in the country, supports the ETS - though chief executive Phil O'Reilly also says it isn't perfect. He has talked to Phillip Mills and his organisation supports in principle the idea that New Zealand should take advantage of a low-carbon economy as quickly as possible.

"It seems to me that execution is the key. We need to make sure we pursue an economically and socially rational path," O'Reilly says. In other words, jump on the cleantech train, but make sure no Kiwi company is disadvantaged. A lot of mainstream companies, particularly SMEs, don't recognise the opportunities and feel threatened or powerless, says O'Reilly. Business New Zealand is working to overcome those fears through programmes like its Sustainable Business Forum.

Mills has form when it comes to awareness around climate change. His book, Fighting Global Obesity, written with wife Jackie and published in 2007, was both a practical guide to personal health and global sustainability.

The personal health angle was understandable, while the sustainability angle grew along with Mills' increasing awareness of the problem of global warming when writing the book.

He tried to get some action by sending copies of his book to Government ministers and mayors and received a few replies while also learning some lessons on how to go about raising awareness on a sensitive public issue.

Just before Christmas, Mills sent out copies of a book called The Clean Industrial Revolution by Australian Ben McNeil to those who had previously received his book. McNeil convincingly lays out a case for Australia to pursue a low-carbon economy and much of what he writes about is applicable to New Zealand.

Mills figured the Christmas break was the only time his targets would get to at least look the book over. To make the message even simpler to take in, he got a band of volunteers to highlight passages in each book and sent the copies to central and local politicians with a hard-hitting cover letter.

"I said, 'I know you are busy but just read the last chapter if you don't have any more time'. I got 65 replies from MPs alone."

He says the case laid out to the Prime Minister when they met him in January was based on four interconnected messages: New Zealand can't afford to miss out on the cleantech trend; we need to protect our environment because it is implicitly connected to tourism and exports; we can achieve massive savings as a country right now by encouraging all companies to measure their carbon footprint and embrace energy efficiency; and as a country, we should become energy independent.

New Zealand has a natural competitive edge, says Tindall, who has invested in around 14 cleantech companies including Lanzatech, which has figured out how to turn steel mill emissions into biofuel and is making inroads into China.

"I get hugely excited by a company like Lanzatech because it looks like it will globally make a significant difference because you can turn all these pollutants going into the air, into a fuel. That's really important, to look at it from that commercial angle. Of the cleantech companies we have invested in, there are two or three with huge potential but we can't talk about them yet. They are very early in the IP phase and we wouldn't want that IP stolen," Tindall says.

At least do due diligence, says Mills, who believes a taskforce would be a good first step. "We're getting good traction around that. My gut feeling is that we will get a taskforce and it will identify significant economic opportunities."

But if the findings of the proposed taskforce are politically palatable, they could disappear into thin air. Time for the Prime Minister to step up, says Icebreaker's Jeremy Moon.

"New Zealand could have a hugely enriching strategy around cleantech that provides commercial and cultural wealth. The role of the Prime Minister is to grab this or there is no way it will happen. There should be a taskforce that reports to the Prime Minister. This is a leadership issue that will define his legacy."

Fyfe agrees, using the example of Air New Zealand. "You slowly start to build a critical mass of people that want to come on board and start to share the belief. I share the view that at Air New Zealand it would have been hard to create momentum and build critical mass if the CEO didn't share the belief.

"The CEO of the country is the Prime Minister. This is a great leadership opportunity for John Key and could define his time as Prime Minister. I think he can create an enduring legacy for New Zealand, but the window of opportunity is tight because other countries will step in and fill the void if we don't step up and claim it."

Says Tindall: "Somehow we have to start the conversation and then build it into our national psyche so it becomes part of our culture."

Mark Revington is the editor of Unlimited magazine.

- Unlimited