Sustainable business is our future and sustainable finance has a significant part to play, but this will require us to think differently and this thinking is being driven both by our younger generations and by Māori.
There is increasing convergence between the thinking of younger generations and the Māori system of values. They are both driving for an integrated system of outcomes, businesses working for wider societal outcomes that are not solely profit driven, not profit at any expense, and not profit over people.
Our business fundamentals need to mirror the desire of our current and future generations to live in a sustainable world. That means business that do no harm and make a meaningful contribution to society, its people and the environment including reversing the damage that has already been done.
This is more than off-setting environmental impacts or making trade-offs. This asks us to reach further and develop restorative economies with businesses that restore aspects of the environment and remove barriers to positive social outcomes. That is where our young people's heads are at, and what Māori models have at their heart.
My kids and their friends are genuinely discussing the prospect of not having children because they are so concerned about the state in which we are leaving this planet to them. This is not the legacy of kaitiakitanga. Kaitiakitanga demands sustainable practices that allow us to leave future generations with a planet that is better, or at least not worse, than when we inherited it.
Changing how we do business
Sustainability is tangible value that we should consider alongside the ROE measurement when we say "what a successful business!" It means that we have to look at our fundamental structures set up to separate profit making and non-profit making activities. Sustainability means that business will change because the younger generations are making different choices. They are choosing not to eat meat, they are choosing not to use fossil fuels, they are making ethical choices based on the sustainability of the planet and its people, and we are having to adapt to that.
What does that mean for businesses to be able to see the opportunities and take them, to remain well-positioned and relevant?
At one level it is about having management teams and governance that are diverse enough to bring the perspectives to the table that are guiding our future. It is not only about having diverse perspectives present, but being prepared to listen to them, figure it out and adapt.
A resistance to doing things differently is understandable, a great number of people consider that we have business models that have largely proven to have worked well. However, there are an increasing number of people in our society who are not being served well, and an increasing number of people who oppose environmental degradation and who expect business to be an integrated part of our societal solution.
Tackling sustainability challenges
The Sustainable Seas National Science Challenge has just announced funding for a number of new innovation projects such as investigating the economic potential of collagen and bioactives from 11-armed sea-star to manage overpopulation, or preventing sun-induced skin damage with New Zealand algae-derived bioactives, or developing a disruptive business model to allow small whānau-owned aquaculture farms of pātiki totara yellowbelly flounder.
We see the signs of change in the science sector: values-based leadership, restorative systems thinking. What are the trade-offs between economic, health and environmental protection? How can we balance climate change and food provision, and what is going into our food — how much energy, water, nutrients, labour, transport. Where are we getting our food from and how is that going to change.
These questions must also become fundamental to doing business in Aotearoa NZ. How are we providing finance in a way that contributes to positive societal outcomes? How do we remove the barriers to ensure no-one is excluded from participating in the financial sector?
How do we create financial models that take account of Māori systems including Māori land ownership and iwi/hapū/whānau values of intergenerational responsibility?
The future of business is working is a way which is not indifferent to what is going on in society, where we are not disinterested in how others may be disadvantaged, where we are not saying "that is someone else's space".
Covid has brought out the best in a lot of companies in that respect, and they feel better off for it.
Organisations have stepped up and said: "We have a civic responsibility here to do what we can to help out" and they have been rewarded for it. In some cases the reward is financial, but in many cases the rewards are in terms of their own people, the pride and commitment that they feel to the organisation, the fact that they are making a difference to people's lives inside and outside of the organisation.
That's the Māori model of business and it is a systems model that we can look to for the future to ensure that we are creating a sustainable future, and leaving the world a better place.
Using our skills to benefit society
In this current climate we need our businesses to look around at who they have and what they can do. There are people and entities out there needing help, particularly with financial skill sets. Connect with an iwi or trust or community group and support them with expertise, that could make a huge difference. Social organisations that are at the front line are making a big impact but struggle in a lot of other ways, and maybe we can change the dial for them in terms of their funding systems and structures, investments or raising funds.
Take something on and apply your skills and watch how that benefits society as well as your organisation. While the intent is related to taking responsibility for contributing to social cohesion and environmental protection, there are tangential benefits of getting involved and expanding your networks, expanding horizons. Is it a distraction from core business? Maybe — but that is what the next generation is asking of us, what tangata whenua are asking of us, what Pasifika are asking of us and what many other Aotearoa/New Zealanders are asking of us.
That is part of our license to operate in a sustainable context.
They are asking businesses to take an interest and be part of the solution. Whether it is social or cultural or environmental, let's be bold and get on board early with this step change. We are getting closer to a common conversation so we can all move forward together.
It is not okay to leave people behind, or destroy the planet, and it is our collective responsibility.
Weaving in the Māori worldview
Within Te Ao Māori, a number of special relationships exist that resemble duty of care — one is the connection with and obligation to look after ancestral lands, mountains, rivers, and other physical and cultural assets.
Another is to our children and future generations.
These special relationships exist because it is believed that neither the natural world, nor the generations to come, can influence the day-to-day decisions that affect everyday life.
They place trust and confidence in the present generation who are in control whilst learning from those that have passed or are elderly.
Sharing knowledge by passing down through generations ensures that current and future generations can survive and prosper.
Many of the values or operating principles that we associate with a Māori worldview, such as kaitiakitanga, form the toolkit to meet those obligations.
These values and principles also guide how Iwi/Māori approach business and finance, as well as guide the formation of business partnerships when investment, and/or economic decisions are made.
Such values and principles could also form a toolkit for transforming the financial system to a more sustainable model, interdependent and connected, by taking an intergenerational long-term view.
Source: SFF Financing the future interim report 2019.
Assessing on kaupapa and tikanga
Some examples of the SFF-endorsed initiatives in play include:
Ta nga mea katoa he whakapapa (understanding externalities) – Tahito Ltd
Tahito is rigorously assessing companies on their alignment with their kaupapa values and principles.
It provides a framework for understanding ethical and sustainable behaviours and values. It is currently applied to the Tahito Te Tai o Rehua Fund. The fund performance is 3.5 per cent above the transtasman benchmark, debunking the myth that impactful investing means accepting a lesser return.
Te Ara Putanga – Our Outcomes Pathway – Parininihi ki Waitotara Incorporation (PKW)
The Kaupapa Evaluation Tool has enabled PKW to assess outcomes based on tikanga to ensure core strategies are being followed in investment decisions.
The tool has been in use for nearly eight years.
Tania Te Rangingangana Simpson (Ngāi Tahu, Ngā Puhi, Tainui) is deputy chair of the Reserve Bank and a director of Tainui Group Holdings and Auckland Airport.