Date posted: 13/05/2020

The economics of ignoring climate change

Perspective from Dr Ganesh Nana, Research Director at Business and Economic Research Limited

In brief

  • In the face of climate change and global pandemics, the way we operate in business must change
  • Exploiting our resources could lead to losing our social licence to operate
  • Those working in the primary sector, including accountants and finance professionals are privileged to be in a position of guardianship over our natural resources
Dr Ganesh Nana

Economists and businesses must consider how their operation models relate to larger global issues like climate change, the ageing population, access to clean water and the COVID-19 pandemic. We, including the primary sector, must all do our part to adapt and innovate to help meet global demands.

While New Zealand has mostly recovered from the Whakaari/White Island volcano eruption in December 2019, as I watch Australia recover from the devastating bushfires of the 2019/2020 season and the entire world adapt to the ongoing threat of COVID-19 (coronavirus), I find myself increasingly questioning the ways in which our society is currently conducting ‘business as usual.’

Through my role as the Research Director at Business and Economic Research Limited (BERL), I focus on society’s most pressing issues not only in New Zealand but around the globe. My team and I examine challenges such as climate change, the ageing population and access to clean water.

Considering the current state of the world, it’s clear to me that we need to examine how we are conducting business and managing our resources in order to ensure future prosperity.

In 2018, the United Nations warned we only had 12 years to limit the negative effects of climate change.  Two years on, a volcanic eruption, a catastrophic bushfire season and a global pandemic later, and it’s clear to me something must change. 

But where do we begin?

“There is a word in te reo Māori - kaitiakitanga - which translates to ‘guardianship.’ Those working in the primary sector can be viewed very much as guardians of the resources within their ambit.” 
 - Dr Ganesh Nana, Research Director at Business and Economic Research Limited.

Protecting the earth through the primary sector 

We must first look at our natural resources and how we can use them more wisely. When I consider the current state of the New Zealand primary sector there is no denying that, while it is clearly rich in resources, it’s also resource dependent. 

In the past, I believe we took our resources and environment for granted. It was only a generation ago that the focus for the primary sector was very much about output and productivity. Now we are being challenged to determine how we can change that model of business into something that actually acknowledges that these resources are limited, stretched, and in some places degrading.

Loss of primary resources would have a massive effect on our basic human needs. Our communities will struggle to find access to clean water, our carbon emissions will continue to climb and what resources we do have left will be restricted. This doesn’t even address the economic ripple effect resulting in increased unemployment rates, lower incomes and higher poverty.

It's critically important that the primary sector look after the resources it's been entrusted with. From a social, community and environmental perspective, it’s useful to recognize the value of our ‘social licence to operate’. I believe businesses only have a social licence to operate because communities and the country allow them to. It's been entrusted to us and we must take that licence seriously.

What we need to do 

There is a word in te reo Māori - kaitiakitanga - which translates to ‘guardianship.’ Those working in the primary sector can be viewed very much as guardians of the resources within their ambit. 

We also must raise the importance of of responsibility. Instead of arguing about who is responsible for polluting a waterway, for example, we need to work together to clean the pollution and prevent it from repeating. We must take collective responsibility for preserving and protecting our primary resources.

The primary sector in New Zealand has a long history of enacting positive change and innovation. New Zealand is recognised as a leader in efficient production of quality products. We’ve diversified to remain relevant through, for example, different varieties of kiwifruit, wine and more. Our economy will see the greatest stability and healthy growth from turning challenges into opportunities.

We must stay focused on the long-term desired outcome, remember why we are making these changes and why we’re here. We must push ourselves and our business partners to reach outside their comfort zone, tackle the biggest challenges across all sectors and to see positive impact on climate change, access to clean water around the globe, and equitable opportunities for all to participate in and contribute to their communities.

Source: [1]

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