Climate change is the challenge of the 21st century, and it is time for businesses to face that challenge, says a partner in one of the country's top law firms.

MinterEllisonRuddWatts financial services partner Lloyd Kavanagh says responding to climate change should trump other sustainability challenges for companies of all sizes. His comments come just weeks before Deloitte's annual Top 200 awards, which will acknowledge a firm demonstrating outstanding sustainable business leadership.

Air New Zealand, Z Energy and Mercury have been named finalists in the category.

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Kavanagh says it's not easy to change business operations to ensure a sustainability-focused output, but it has to be done to ensure the company will survive long-term.

"Many investors have a short-term focus, and some leaders can have short tenure, so deciding to make fundamental changes to business models or to prioritise the longer-term future can be challenging. However, it needs to be done, for the sake of the planet, and for the success of our businesses – and we should have started yesterday," says Kavanagh.

New Zealand's business community is beginning to wake to the realities of "climate competency", but it is well behind the shift to sustainable businesses practices in other developed countries, he says.

"We are still living in a comfort zone about where we are heading, and we must do more. There are lots of good strategy day discussions, but these need to translate into changes to business as usual.

"Some prominent New Zealand companies are doing great work to reduce their emissions, find creative solutions to this global issue and build and strengthen their businesses."

Kavanagh says it is no longer enough for a business to hire a sustainability manager. He says organisations need to have climate-competent boards.

Firms need to "operationalise climate change awareness" into day-to-day management, he says.

"Business leaders need to communicate why changes are being made and how investing to balance short-term profits with the future sustainability of the business is critical. There are significant competitive advantages and opportunities for those who can adapt quickly to the new environment. And in some cases, those stakeholders are moving their expectations, faster than management."

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All the Deloitte Top 200 winners will be revealed at a gala event being held at Auckland's Spark Arena on December 5. Tickets can be bought here.

Sustainable Business Leadership - Sponsored by MinterEllisonRuddWatts

• Air New Zealand
• Mercury
• Z Energy