Labour Party leader Phil Goff startled a few people when he apologised at the party's annual conference for Labour's over-emphasis on "sideshow" issues such as energy-efficient lightbulbs and water-saving shower heads.

It may have been pragmatic politics, but Goff's apology angered many people who have campaigned for New Zealand businesses and consumers to do more to conserve energy, and who didn't see Labour's message as "nanny state" edicts - just as sensible behaviour.

Goff's words were no doubt greeted with glee by the National Government, which has taken steps to limit the use of the word "sustainability" in Wellington because of its perceived identification with Labour.

After all, in a pre-election speech, National's Nick Smith - now Environment Minister - pointed out that then-PM Helen Clark used the S-word "ad nauseam", 42 times to be precise, in her annual speech to Parliament.

The Green Party was less than impressed with Labour's climbdown. "It's a no-brainer to have energy-efficiency standards for lighting - it's practical. I think they were very gutless words," says Green co-leader Russel Norman.

"This is so sensible and National are being so destructive. We have cave dwellers in Government - this is like the 19th century."

But does National's apparent reluctance to utter the S-word - at least in comparison with Labour - really mean that green issues have taken a back seat?

As evidence they have, Norman points to a number of anti-sustainability moves National has taken since coming into power, such as its scrapping of Govt3, a programme which helped central government agencies, departments and ministries develop initiatives in areas such as recycling and waste minimisation.

The programme helped the IRD save $1 million a year, says Norman, through reducing the use of paper and fuel. National has also scrapped the Organic Advisory Programme, which helped farming businesses learn about converting to organic practices. Also on the casualty list was the Enviro Schools programme, another relatively inexpensive venture, which brought schools and the community together to work on sustainability projects.

"It's about preparing for the future," says Norman. Businesses that don't address sustainability may cause the whole New Zealand economy to be left behind. "It's like we have taken our eye off the ball."

While Prime Minister John Key is still keen to push the "100 per cent Pure" tourism campaign, people look at New Zealand's environmental promotion and are shocked at the reality, says Norman. "Tourists who come to New Zealand can't believe that there's no public recycling."

Whatever its stance on shower heads and light bulbs, Labour insists it hasn't lost its green tinge. "We are firmly committed to being sustainable," says Charles Chauvel, the party's climate change spokesman. Goff's apology was more about not getting the messaging right; the issues in question looked like a series of distractions rather than a core message, he says. "It's not about light bulbs and shower heads. It's about making people's choices easier, and making a difference.

"With the current Government, sustainability has become less popular," argues Chauvel. "Which shows that they are behind rather than ahead of the curve of history. Most enlightened businesses are getting on with it and the consumers are reacting accordingly.

"I think this Government's job is to make it easy for people to do the right thing."

Nick Smith's message is inconsistent, argues Chauvel, who says the Environment Minister failed to speak up when Energy and Resources Minister Gerry Brownlee proposed mining on conservation land.

"National can't expect the rest of the world to embrace us as clean and green - it astounds me that they have just not got the environmental messaging right. It is going to be a real problem for the future."

Smith, however, argues that "It's not about [changing] where we are going but how we get there." National is moving from "micro-regulating people's lives" - like Labour - to a policy of incentives, he says.

National is more focused on giving practical tips to business and consumers rather than the previous Government's "vague sustainability agenda", says Smith. "There was a real sense of frustration among businesses and homeowners about the nanny state approach and regulation."

Labour spent a lot of time trying to make government departments more sustainable, Smith observes, "yet the entire public service of Wellington bureaucracy causes less emissions than the Huntly power station". Meanwhile, National has accelerated certain programmes, he says, claiming that more solar panels have been installed in nine months than in the previous nine years. "Bureaucracy got in the way," says Smith.

National is interested in policies which make business sense, he says."We are prepared to provide incentives for better behaviour. From October 1, electric cars [are] exempt from road user tax ... With home insulation, we are not going to regulate but are saying, 'Here is $1600 to help insulate your home'."

In the bigger picture, the ministry's five priorities will be: climate change, water quality, air quality, bio-diversity and management of coast and oceans. For businesses looking for direction, National's "Bluegreen" vision for New Zealand, launched three years ago, is "the Bible" for New Zealand's environmental programme, says Smith. "We are not going to ban the incandescent light bulb. The Bluegreen vision is one of incentives and information and not treating people as idiots."

However, the Environment Minister acknowledges the Government needs to do a better job of informing businesses and consumers about good, practical ways of operating more efficiently. Next year the Government will be talking to small and medium-sized businesses in particular about the impacts of climate change and practical ways they can make efficiencies. It will also be discussing the potential business opportunities.

Meanwhile, Brownlee has launched a new television campaign called The Energy Spot - a Food in a Minute-style slot running three times a week and giving energy-saving tips to consumers and businesses.

National's stance has been well received by Business New Zealand. "National don't do slogans," says the organisation's chief executive, Phil O'Reilly.

"The former Government was using sustainability as salt and pepper in any conversation."

As an example, O'Reilly was angered by the sight of the green public recycling bins that sprouted on the Terrace during Labour's term. The bins were a move to appease tourists, says O'Reilly, but "there are no tourists on the Terrace, they're mainly politicians!" He saw the bins as a cynical gesture by Labour.

But whatever the politics, O'Reilly says sustainability as a concept is profoundly important to New Zealand because it matters to consumers around the world.

"Corporate Social Responsibility, food security, product integrity, all of these subjects are just a part of the same conversation," says O'Reilly.

But while Business NZ is working with some of the country's larger companies in its Sustainable Business Forum, O'Reilly accepts some businesses are falling behind. "There's a cohort of businesses that have probably become less focused on this," he says. "You have three groups in the business community: one which is suspicious of the whole thing - some of these guys would argue against climate change; others say they will get to it; and then there are the smart businesses who are saying, 'Let's see what consumers want'."

While some businesses might have been more focused on sustainability if the Government was generating legislation in that area, compliance is not the way ahead, says O'Reilly. Business must be allowed to lead its own initiatives, he argues. Businesses such as Westpac are just carrying on - and would do under any Government - and O'Reilly points out that New Zealand can't be sustainable if it's poor.

But however highly consumers may rate green issues, there is no doubt National's return to power has seen an easing in the pressure on business to make sustainability a high priority. The change is evident in organisations such as the Electricity Commission and the Energy Efficiency and Conservation Authority. Says one Wellington insider: "They've completely flipped their positioning - now it's all about being the choice of the consumer. Before it was regulatory. Now it is much more about encouraging manufacturers to use more energy-efficient light bulbs, not compelling them to."

Katherine Rich, chief executive of the Food & Grocery Council and a former National MP, says most of her food manufacturer members are taking steps to improve their sustainability. She is comfortable with the National Government's position. "Nick Smith has been Bluegreen champion for over a decade. I'm in no doubt that the Government is taking it seriously but I think they have backed away from the compulsion. I think the general public thought some of their ideas were over-the-top messages."

Attending the Auckland regional Sustainable Business Network awards, she realised "a hell of a lot of businesses were doing it anyway".

But the Sustainable Business Network, a not-for-profit organisation which helps large and small businesses use sustainable practices, has itself been a victim of the change in government focus. Soon after National came to power it lost $250,000 in government funding, which it spent on subsidising training courses.

Chief executive Rachel Brown is now relying on her 800-strong membership to finance her work. "We are refocusing on what is our mandate. We said, 'Let's open up our tools and services - and network with businesses that care about this stuff'."

Brown has returned from the fifth Australia New Zealand Climate and Business conference, attended by some New Zealand government departments, Auckland-region councils and companies including Fletcher Building, Fonterra and Aquaflow.

"What they were saying was, 'Tell us what the framework is'," says Brown. "'Give us some surety about the price of carbon'."

"All that lack of clarity makes it hard to invest. They don't know what the price of energy is going to be."

The game has changed for New Zealand businesses, says Brown. There is a new Government which is none too keen on the word "sustainability" and there is a recession, so money is tight. "But it's a myth that to be sustainable there has to be a cost to the bottom line. Sustainability helps business efficiency." Many New Zealand businesses, she maintains, are still "blissfully unaware".

"I still think there are a lot of people out there who don't think this is happening, they think it's a new trend. I think they are hoping that it's going to go away. The problem is, if they don't respond they could become the dinosaurs.

"Some of them say: 'I've run my business for 50 years, I've been successful and never had to worry about being sustainable'."

Then there are companies that are adopting sustainable practices, but never talk about what they are doing. "If you say, 'What are you doing to help climate change?', they say, 'Nothing'. And then they'll admit they've introduced a new piece of machinery which is energy-saving, but they've not made the connection that it is sustainable.

"Things like climate change or sustainability are larger ideas they don't necessarily grasp," says Brown.

The Sustainable Business Network's regional awards reward companies which have made the connection, and the national awards will be held on November 12.

For Wellington-based consultant Peter Salmon, managing director of Moxie Design, business has changed noticeably since National came to power. The design strategy company, which specialises in sustainable development, has found most New Zealand clients have gone on the "go-slow".

Salmon had a lot of work lined up with one large business, but the order came down from head office: "We are not doing anything [about sustainability], just make us money," says Salmon.

Other companies were looking at Corporate Social Responsibility - things such as working with their supply chain - but, he says, "they have seen a signal that it is not that important".

Part of the reason is the recession; another part is the message coming from the Government.

It's not all bad. "Those that are committed can see the value proposition - those on the fringe have lost momentum," he says.

While many New Zealand business leaders are questioning whether this country should really be leading the way towards more sustainable practices, Salmon says "this is an opportunity for us - people think we are clean and green, why can't we try and and own that space?"

As an example of what can be done, he cites US outdoor clothing company Patagonia, which puts a lot of stress on things such as the traceability of its high-quality products, and has a loyal following because of it.

At the same time, Moxie is receiving more interest from overseas, especially the US. "We are seeing more traffic to our website from the US and we see that's where the opportunities are - we go where the work is."

Salmon recently hosted a visit to New Zealand by Duke Stump, a US-based marketer who has worked with companies such as Nike and Seventh Generation (the American version of New Zealand's Ecostore) and a leading thinker on the branding of sustainability.

When it comes to sustainability, no one expects perfection, argues Stump. "Right now we are just starting," he says.

At the core it is about trust, he argues. Seventh Generation made a lot of mistakes. "Every time we made a mistake, we told the world: 'We f****d up'.

"People don't want perfection, they want honesty. When the swimmer Michael Phelps did a bong hit, he admitted it, and Kelloggs dropped him. Now people hate Kelloggs and love Michael Phelps."

Oxfam's New Zealand executive director Barry Coates has been a vocal advocate for New Zealand to actively manage climate change and to act responsibly for the sake of the whole Pacific region.

"Sustainability tends to get framed in vague terms. People see it as aspirational whereas you can master our greenhouse gas emissions," he says.

The fact that emissions are 24 per cent higher than in 1990 means something has to be done. "ETS is just part of the challenge, it goes well beyond that."

"We all should be worried about climate change," he says. "It does not matter which side we are on - it's all our problem - and we have to deal with it."

Meanwhile, New Zealand will come to be seen as an unsophisticated developing country unable to meet accepted standards if businesses continue to do nothing.

"We are just seeing the tip of the iceberg of food miles and product standards. It is only going to become far more intense."