Navigating the Changing Landscape of International Trade: New Zealand Exporters Face Sustainability Pressures
New Zealand Exporters Face Pressure to Meet International Climate Standards
Exporters in New Zealand are facing increasing pressure to meet international standards and expectations on sustainability and climate change in order to maintain their competitive advantage in major markets. A recent report commissioned by legal firm Chapman Tripp and the Aotearoa Circle titled “Protecting New Zealand’s Competitive Advantage” reveals that more than 80 percent of New Zealand’s exports by value are sent to countries with mandatory climate-related disclosures in force or proposed.
One key development that exporters need to be aware of is the European Union’s (EU) carbon border adjustment mechanism (CBAM), which came into force in late 2023. The CBAM imposes a cost on embedded emissions in certain carbon-intensive exports to the EU, potentially affecting market behaviors. While New Zealand exports are not immediately impacted by the CBAM, the regulation could have indirect effects on the country’s exporters.
In addition to the CBAM, the EU’s Deforestation Regulation is another potential concern for New Zealand exporters if not navigated successfully. Chapman Tripp Partner Nicola Swan emphasizes the importance of keeping up with global demands for reporting on climate risk, greenhouse gas emissions, and broader environmental, social, and governance (ESG) capabilities to ensure New Zealand does not fall behind in meeting international standards.
The report highlights that over 60 percent of world GDP is now subject to mandatory climate-related disclosure measures, indicating a global trend that is here to stay. Exporters will need to meet the requirements demanded by overseas customers subject to mandatory climate-related disclosures, with implications for both big and small exporters. Failure to meet these requirements could put business relationships at risk.
Simon Tucker, director of global sustainability at Fonterra, notes that the number of customers with science-based climate targets is growing, and many other exporters are likely facing similar challenges. The report offers a strategic approach to help exporters navigate these challenges and meet the increasing demands for sustainability and climate-related disclosures in international markets.
Overall, the report underscores the importance of staying informed and proactive in addressing climate-related challenges to ensure the continued success of New Zealand’s export industry in a rapidly changing global landscape.