Tarunesh Singh
Partner, Risk Advisory National Leader
Key contact
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Phillip Roth
National ESG and Sustainability Sector Leadership Team, Business Advisory Partner
Environmental risk is one of the main risks executives globally believe their businesses are least prepared for, and New Zealand is no exception, as highlighted in the BDO New Zealand Risk Landscape Report 2024. Climate change poses a significant threat to all New Zealanders and to New Zealand businesses.
Climate change and environmental emergencies create risks for businesses in terms of their infrastructure, supply chains and resources, not to mention the transitional challenges associated with increased Government regulation, changing consumer demand, and increased insurance costs.
In Prime Minister Christopher Luxon’s pre-Budget speech to the Auckland Business Chamber, he stated a vision that by 2040 New Zealand would be known for three characteristics. Of these was “a comprehensive response to climate change, both on track to achieve our ambitious emissions targets, and resilient to the challenges of a more volatile world.” But what does Budget 2024 deliver to support this pledge?
The Government has reiterated its commitment to meeting emission reduction targets, including the overarching goal of carbon net-zero by 2050. In terms of new spending, Budget 2024 has announced the $1.2bn Regional Infrastructure Fund, which has a focus on climate resilience projects, along with a package of initiatives worth more than $1bn to further support the rebuild and recovery of communities affected by Cyclone Gabrielle and the Auckland Anniversary Floods. The Budget also promises to continue the funding of around $2.6bn of “high value” climate change initiatives previously funded by the Climate Emergency Response Fund.
- More than $1bn in a package of initiatives for Cyclone relief, resilience and emergency preparedness. This includes $939m for the NZ Transport Agency and local councils, $10.6m over the next four years for a new National Emergency Management Facility in Wellington, $27m for removal and treatment of woody debris in Tairawhiti, and $16.1m in new funding for one year to support councils’ capability to speed up critical recovery functions (among others).
- $200m boost for the Rail Network Improvement Programme
- Extending the reach of the Waste Disposal Levy to support a wider range of waste related and environmental activities.
- Discontinuing ring-fencing revenue raised through the Emissions Trading Scheme (ETS) in a ‘Climate Emergency Response Fund’.
“Aotearoa faces significant risks from climate change, and these will continue to impact us on a personal level, in our businesses and in the wider economy. Last year’s floods and Cyclone Gabrielle have caused lasting damage to many sectors, and it’s positive to see the Government’s announced funding for cyclone and flood recovery, as well as investing in more resilient infrastructure. Beyond today’s Budget, a sustained, cross-party focus on measures to address the causes and impacts of climate change will be required – with ongoing collaboration among public and private sector stakeholders. Of course, a sustained approach will also demand careful balance, ensuring New Zealand remains a positive place to do business, and that businesses are supported as they strive to adhere to new policies and goals. For businesses, it’s about understanding not only the risks posed by climate change, but also the opportunities. As consumer demands change and people seek out more environmentally-friendly solutions, businesses that have embraced sustainability may carve out a point of difference.” – Tarunesh Singh, BDO Risk Advisory National Leader |
For more tips, view our BDO New Zealand Risk Landscape Report 2024.
You can read more details on Budget 2024 at the Government Budget website here.
Climate change, like any business risk, requires challenging conversations, ongoing focus and robust planning. Speak to your BDO adviser about the impacts of Budget 2024 and how you can best address sustainability challenges in your business.
Tarunesh Singh
Phillip Roth