Mainfreight says climate transition risks will be "highly significant" over the short and medium term. Photo / ManawatuNZ.co.nz
Mainfreight says climate transition risks will be "highly significant" over the short and medium term. Photo / ManawatuNZ.co.nz
Mainfreight has assessed its position in respect to climate risks and opportunities as “net positive” in its first climate risks report.
The report was prepared with reference to the Taskforce for Climate-Related Financial Disclosures (TCFD), a framework to improve transparency and evaluation of climate risks in global capital markets.
Thereport said NZX-listed Mainfreight acknowledged that where climate risks existed, so did financial risks, but also practical opportunities.
It is a separate work to the climate-related disclosure reporting Mainfreight will publish from next year, which would assess in more detail risks and opportunities in Mainfreight’s five global operating regions.
The new report said the global transport company was now considering “applicable emission targets for the group”.
It said globally, shipping, logistics and transportation were “a major source of greenhouse gas emissions contributing to climate change and one which continues to grow”.
NZX-listed Mainfreight will make climate-related disclosures from next year. Photo / Alex Cairns
“As a result, the wider industry features heavily in many national transition strategies towards climate action.
“Our expectation, supported by the [report] analysis, is that transition risks will be highly significant, especially over the short and medium time horizons.”
Identifying levels of risk in areas and scenarios ranging from transitional to physical, the report also highlights opportunities in policy and legal, technology, reputational and “acute and chronic” areas.
It said early adopters of new technologies would get more initial support, more market attention and have more data and lessons about the technology to apply.
Early or fast movers to climate response were likely to get a “more enduring reputational boost”, the report added.
In the “acute and chronic” opportunity area, the report said effective scenario analysis and business continuity planning would enable market-leading responses to major events.
“Fast responses and adaption provides a more reliable and resilient service that increasingly captures market share,” it said.
Transitional risks identified included an increase in greenhouse gas pricing through emissions trading schemes or carbon tax, which would have the effect of increasing costs of raw materials, most notably fuel.
Mainfreight says its heavy truck fleet is less than half the age of New Zealand's heavy fleet average.
Other identified risks were greater compliance reporting requirement, changing customer behaviour and preferences which would reduce sales activity in certain industries and organisations, and the cost and potential for failure in new technology adoption.
Another potential risk was divergence in stakeholder perspectives with growing divides in opinion requiring greater mediation and management.
“Our approach, fundamentally driven by our 100-year vision, is consistent with managing for all scenarios and time horizons based on the current outlook. Where signals lend themselves towards one scenario over others, pace and priority will be adjusted accordingly,” the report said.
“By preparing for a low-carbon transition while leveraging the flexibility and resilience of our network, we are well-placed to respond quickly to both changing demands and disruptive events.
“On balance, we assess our position in respect to climate risk and opportunities as net positive where our preparation, resilience and adaptability serve to improve our competitive offering.”
Mainfreight was decarbonising core elements of the business, the report said.
Actions to date included maintaining a modern truck fleet less than half the age of the New Zealand heavy fleet average, electrifying that fleet (20-plus vehicles so far), electrifying 80 per cent of handling equipment such as forklifts, and transitioning 43 per cent of its smaller vehicle fleet to electric and hybrid energy.
The company’s new Dandenong South facility in Australia was cited as an example of Mainfreight’s designs for the future, incorporating energy and water resilience features.
The report offered a sample of risks and opportunities in its five global operating regions.
For example, in Europe, an identified risk was a “fast-evolving legislative environment” which might be challenging to keep abreast of.
In New Zealand, New Zealand new technologies were said to be less accessible due to the country’s smaller market and challenging geography.
On the opportunities side, the European Union’s large focus on new technologies would likely make these more accessible, and New Zealand’s high existing customer interest in low-carbon solutions and “excellent” renewables infrastructure was also cited as an opportunity.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.
