HOW BRAND NZ SHOWS UP IN THE USA AND HOW WE CAN BUILD OUR VALUE
David Downs, CEO of the New Zealand Story, an ambitious organisation marketing New Zealand to the world presented insights from the latest U.S. research.
Moderator: Tim McCready
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United States Business Summit 2023 30 November 2023 at Cordis, Auckland. Brought to you by NZ INC. and Auckland Business Chamber.
PRIZE DRAW
Prize draw: Two return business class flights to New York City courtesy of Air New Zealand and a selection of meats from Silver Fern Farms.
Auckland Business Chamber event director Katy Riddell with Air New Zealand senior manager Mark Kennedy.
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United States Business Summit 2023 30 November 2023 at Cordis, Auckland. Brought to you by NZ INC. and Auckland Business Chamber.
Tim McCready, Summit MC closes the 2023 US Business Summit. — United States Business Summit 2023 30 November 2023 at Cordis, Auckland. Brought to you by NZ INC. and Auckland Business Chamber.
SUMMIT SUMMARY
Summit co-chairs Fran O’Sullivan and Simon Bridges summarise the United States Business Summit with Summit MC Tim McCready.
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United States Business Summit 2023 30 November 2023 at Cordis, Auckland. Brought to you by NZ INC. and Auckland Business Chamber.
Sustainability: Is it at risk of becoming a fair-weather friend?
It was only 10 months ago that New Zealand suffered two of its most costly weather-related disasters.
The Auckland Anniversary floods and Cyclone Gabrielle resulted in insurance claims of more than $2 billion. Climate change was a top concern of the nation. Ipsos’ New Zealand Issues Monitor ranked it the fifth-most-significant concern for New Zealanders in February and May 2023.
But you just have to look to the recent election to see how much has changed since then.
Climate change was barely mentioned on the campaign trail or during the debates by the two candidates vying to be Prime Minister.
By August, the Ipsos survey saw climate change slip out of the top five concerns for New Zealanders and making way for worries about the cost of living, crime, housing, healthcare and the economy.
This is a trend seen globally, where soaring inflation and the cost-of-living crisis has seen consumers shift to cheaper and often less-sustainable products and services, and their attention shift away from the climate.
EY’s Future Consumer Index, which surveyed 21,000 consumers across 27 countries, found that affordability was the top priority at 35 per cent (up from 25 per cent in October 2022). Of the five consumer segments, “planet first” saw the biggest decrease, falling from 25 per cent in 2022 to 16 per cent this year.
With more immediate challenges pushing climate action further down the priority list, it is at risk of becoming a fair-weather friend. The irony of that is noted.
Criticism of sustainable and environmental, social and governance (ESG) investing has gained momentum recently, particularly in the United States as it has become increasingly politicised.
Simultaneously, there has been a notable increase in the amount of “anti-ESG” funds, defined as those that invest in assets that were traditionally excluded by socially responsible funds and often aligned with politically conservative values.
Flows into anti-ESG funds peaked in the third quarter of 2022, according to American financial services firm MorningStar. More than 80 per cent of the US$377 million ($630m) raised that quarter flowed into the first fund of Strive Asset Management – an investment firm founded by Republican presidential candidate and pharmaceutical entrepreneur Vivek Ramaswamy to counter the “woke” investment practices of more established ESG-focused firms like BlackRock.
In his campaign launch video, Ramaswamy criticised “the woke left” and its focus on diversity, denouncing policies from left-leaning politicians used to address the Covid-19 pandemic, gender issues and climate change.
Another Republican presidential candidate, Florida Governor Ron DeSantis, also took aim against ESG investing this year, signing a law that prohibits the state’s public or state-controlled funds to invest based on ESG factors. The anti-ESG legislation is set to be a model for other Republican-led states, prioritising financial returns for state funds and state pensions and preventing the issuance of green bonds.
Even BlackRock CEO Larry Fink, a longtime proponent of investing with ESG standards in mind, said in June that while he hasn’t changed his position on ESG, he has stopped using the acronym following its weaponisation by the far left and the far right of politics.
More recent data from MorningStar reveals that anti-ESG funds have fallen dramatically from last year’s peak. The firm suggested in its headline that “anti-ESG might be over before it even got going”. It is also worth recognising that the surge of investment into anti-ESG remains miniscule compared to the vast pool of ESG assets.
Bloomberg Intelligence estimates these will reach US$50 trillion ($83.5t) in 2025.
Without a doubt, the question over whether anti-ESG is a genuine shift in investment philosophies or merely a reflection of political discourse will linger. The US presidential election is set down for November 5 next year.
Most of us are familiar with greenwashing, where companies and brands exaggerate or even fabricate their commitment to sustainability and eco-friendly practices without substantiating their claims.
It has become a growing concern as consumers and investors increasingly seek genuinely environmentally responsible options.
In response, it has given rise to a contrasting phenomenon: greenhushing. In this case, businesses make a deliberate choice to downplay or even hide their sustainability initiatives and credentials.
One reason for this is the ongoing political hostility over climate change. Advocates for stronger environmental action are pushing for even further efforts, and those with opposing views are boycotting firms for even acknowledging climate change should be factored into business decisions.
Meanwhile, some firms are greenhushing as a protective measure against scrutiny. The heightened emphasis on verification and transparency means that loudly announcing sustainability efforts invites increased attention and the possibility of criticism.
With governments and regulatory bodies cracking down on greenwashing and demanding companies substantiate the claims they make, there is a growing number of businesses staying quiet about their efforts as a prudent course of action amid the risk of a potential lawsuit.
While other companies choose to under-report their sustainability efforts to avoid being asked for ever-expanding amounts of data and the associated expense associated with verification.
Greenhushing can be seen rippling through sustainable funds as well. US-based fintech consultancy Broadridge identified 44 sustainable funds that dropped the word “sustainable” from their fund in the first half of 2023, contrasting with 2022, when 99 funds added the word to their name.
This is linked to the European Securities and Markets Authority signalling that greenwashing has become a major concern for policymakers and it may move to regulate the use of firms using ESG or sustainability-related terms to avoid funds obtaining an unfair competitive advantage.
No discussion of current trends impacting business would be complete without the mention of artificial intelligence (AI).
It has quickly emerged as a powerful tool for myriad industries seeking to adapt and mitigate the impacts of climate change and accelerate the transition to a more sustainable and resilient future.
AI-informed precision agriculture can help to optimise resource use, reduce waste, and enhance crop yields. The energy sector is being made more sustainable with AI forecasting for renewable energy sources, grid optimisation and demand-side management. AI-powered logistics and traffic management can help reduce transport emissions and improve fuel efficiency.
In the construction and real estate industry, AI can track the use of a building and use historical patterns to adjust lighting and air conditioning. It can help to identify when it makes economic and climate sense to make upgrades to buildings.
However, there is an often-overlooked counterpoint: these technologies also contribute significantly to greenhouse gas emissions. Data centres rival the aviation industry in their carbon footprint and consume significant amounts of water.
As technological developments progress, the demand for energy to continue to train and operate these systems is only set to increase. As AI becomes more deeply ingrained in the world around us, finding sustainable energy solutions to power it will be an increasing challenge. But never fear: AI will undoubtedly help us solve it.
Cybersecurity concerns aired in a Taumata Rau Conversation add to the discussion New Zealand needs on national security issues.
Two years ago, the Royal Commission of Inquiry into a terrorist attack in Christchurch challenged the government to build a conversation with New Zealanders about national security challenges.
An expert discussion on cybersecurity at the University on 24 October was a contribution to that goal. “We need the sorts of conversations that we’re having now,” Tony Lynch, a top national security official, told the audience.
Fellow panellists in the Taumata Rau Conversation, hosted by Vice-Chancellor Professor Dawn Freshwater, were:
The background included cyber-attacks which have targeted nationally significant organisations including Parliament and universities. A ransomware assault crippled the Waikato District Health Board in 2021 and last month electronic ticketing for Auckland public transport was similarly taken out of action.
Lynch, the head of the National Security Group in the Department of the Prime Minister and Cabinet, walked the audience through the nation’s first national security strategy Secure Together – Tō Tātou Korowai Manaaki, issued in August by the Ministry of Defence.
Malicious state and non-state actors are a persistent cyber threat to all New Zealanders,
How far do we lock down New Zealand and stop that free flow of information? You can go too far and then you end up with the Great New Zealand Firewall.
Individuals and private organisations are key in fending off the assaults since the bulk of cybersecurity capability and effort lies outside of the government.
Asked about his biggest concerns, Lynch highlighted the increasing interconnectedness of critical infrastructure, as powerfully demonstrated in Hawke’s Bay during Cyclone Gabrielle when electricity and communications failed after the flooding of a power station, impeding emergency responders and cutting services such as EFTPOS and ATMs.
Critical infrastructure needs more of a “system” approach, sharing information across sectors, he said. Likewise, Fong was focused on vulnerabilities from the intertwining of physical and digital infrastructure and reliance on the global digital supply chain.
In Russello’s view, New Zealand is “not where we should be” on cybersecurity for reasons including a lack of investment, a shortage of cybersecurity specialists, including in academia, and businesses treating digital security as a late-stage add-on.
Burnout of cybersecurity workers was a topic and moderator Tim McCready prompted a discussion about the potential for minimum standards and mandatory reporting.
Issues with critical infrastructure seemed to support a regulatory move in that direction, away from New Zealand’s traditional principles-based approach, according to Lynch. However, Fong cautioned there were no “silver bullets.”
The audience learned from McEwen of issues facing a digital network linking our scientists to the world.
The Research Education Advanced Network New Zealand, which she heads, is a Crown-owned company operating a network which lets researchers collaborate on data-intensive projects and is used by entities including universities and Crown Research Institutes.
In instances such as Russia’s invasion of Ukraine or the Taliban’s grab for power in Afghanistan, should the global community of research and education networks cut off those nations’ scientists and researchers?
“That’s been the big debate for us,” said McEwen. “We’ve come to the point where we keep collaboration going but we pull off research programmes where necessary.”
Risks from interconnected infrastructure were demonstrated in Hawke’s Bay during Cyclone Gabrielle when electricity and communications failed along with services such as EFTPOS and ATMs.
In Europe, Russian scientists were cut off from the Large Hadron Collider, the world’s most powerful particle accelerator, because research could be weaponised, she said.
Another conversation in McEwen’s world is the balance between security and information flow.
“How far do we lock down New Zealand and stop that free flow of information?” asked McEwen. “You can go too far and then you end up with the Great New Zealand Firewall.”
Taumata Rau Conversations will continue into 2024. The series aims to spark meaningful discussions from multiple perspectives on the major issues confronting Aotearoa New Zealand.
The cybersecurity event was the second in the series, following a discussion of the future of the health workforce.
Mood of the Boardroom: Automation finds favour (NZ Herald)
Conversations about the future workforce have been running hot lately, particularly following the release of OpenAI’s ChatGPT. Recently, both IBM and British telecommunications giant BT Group cited automation and digitisation when announcing job cuts.
Automation is transforming almost all industries. Farmers are harnessing the power of automation to optimise every aspect of their operations, from herd management to milk production.
A recent Goldman Sachs study predicts that generative AI tools could see 300 million full-time jobs lost or diminished worldwide, leading to significant disruption in the job market.
Business leaders were asked whether Government should change the tax settings to accelerate investment in automation to lift productivity.
They overwhelmingly responded yes, with 68 per cent of respondents saying it should, underscoring the potential seen in automation to significantly boost productivity within various sectors.
“Technology can deliver significant efficiency, productivity, and sustainability benefits, and incentivising uptake across all levels of the economy will bring substantial benefits to New Zealand,” says Spark CEO, Jolie Hodson.
An education boss says “we need to ensure there is more investment in R&D to support locally led and developed AI and automation expertise, or this will become a process of offshoring and dependency on foreign providers (with many associated risks of both cost and missed opportunity).”
Just 15 per cent advocated against alternating tax settings.
Sam Stubbs, founder and CEO of Simplicity, notes that the crux of the matter lies in policy alignment rather than simply adjusting tax settings and deductibility.
Furthermore, a finance executive says the necessary incentives for promoting automation already exist within the current framework.
This perspective is backed up by a professional director, who says that businesses should already be actively pursuing automation, with current economic factors like inflation serving as additional driving forces.
Fonterra’s vice-president of food service for Greater China Justin Dai, says the $2 billion food service business the global dairy giant operates in China is evolving to keep ahead of rapidly changing consumer preferences.
Fonterra’s focus on localisation and innovation and the fusion of dairy goodness with local preferences in China has been a pillar of its success.
An example of this is the innovative “cheese dirty coffee” launched a year ago, a drink that combines espresso with milk, cream, cream cheese and butter.
“I know it sounds a bit odd,” Dai told the 2023 China Business Summit. “But when this dirty coffee was launched about a year ago, it was an immediate hit. It was launched by one of the large local coffee chains in China, and in the first week nationwide more than six million cups were sold.”
Fonterra’s commitment to innovation is underscored by the establishment of five application centres in China over the past decade, in Shanghai, Beijing, Guangzhou, Chengdu and a newly opened facility in Shenzhen.
The centres are a base for collaborative creativity, both within Fonterra and also with external stakeholders including bakeries, coffee shops, restaurants and retailers.
“This is an advantage we have in China, to work together with our customers to drive innovation,” Dai says. “We have strong confidence in the outlook of China. Demand is coming back, and we have the confidence to continue innovation.
“We will continue to invest in our partnership with our customers, going broader and deeper with our partners to continue to bring the goodness of New Zealand dairy into Chinese consumers’ recipes.”
Through Anchor Food Professionals, Fonterra serves four major channels within China’s food service market: bakery, beverage, dining and the rapidly growing retail food service sector. Its reach spans over 470 cities, including all tier one and tier two cities, along with hundreds of tier three and tier four cities, in partnership with its authorised Anchor distributors.
Key trends shaping the market:
● Gen-Z’s affinity for traditional Chinese pastries infused with dairy is creating new culinary opportunities.
● Social media’s pervasive influence is revolutionising buying behaviour, prompting an intense marketing arms race.
● The interplay between premium and mass markets is intensifying competition and redefining strategies.
● Fast, bold innovation is blurring channel boundaries and redefining the industry.
● The shift towards varied dining occasions, encompassing online, offline and food service retail, is altering consumption habits.
● Niche brands and the untapped potential of lower-tier cities present vast growth opportunities.
Despite the pandemic and border restrictions, New Zealand mānuka honey exporter Comvita was able to elevate its market share in mainland China from 39 per cent to an impressive 60 per cent.
Andy Chen, Regional CEO APAC for Comvita, shared the story behind this success at the China Business Summit last month.
He explained that the brand’s New Zealand origin and reputation as the largest mānuka honey manufacturer had been key selling points in the past, but these narratives lost their effectiveness several years ago, resulting in a plateau in growth.
Chen explained that the China market is constantly changing. “In the last 5000 years of China, the only thing that has never changed is change,” he told the Summit.
“Chinese consumers are very open-minded. They embrace new stuff every day, but they are also impatient. We need new stories for them.”
In 2020, under the guidance of new leadership led by group chief executive David Banfield, the honey company began sharing the “Why Comvita?” story. Comvita began highlighting its strengths as a business — that it is not only a leader from New Zealand in terms of beekeeping, but also emphasising its position as the only brand worldwide to ensure quality control from “land to hand”, including comprehensive soil health management and rigorous testing procedures. Storytelling around these areas helped Comvita connect with Chinese consumers and secure rapid growth in the Chinese market.
In 2022, Comvita again adapted, this time asking: “What is more relevant to Chinese consumers after the pandemic?”
Chen says Comvita’s consumers tend to be upper-middle class, well-educated, and environmentally conscious even before the pandemic. As a response, Comvita unveiled its “Harmony Plan,” demonstrating its commitment to sustainability, carbon neutrality by 2025, and bee welfare initiatives.
As part of this, Comvita is committed to achieving carbon neutrality by 2025, and ultimately becoming carbon positive by 2030. It is minimising its environmental impact through carbon reduction and improving the circularity of its packaging.
Comvita has committed to the rescue of 10 million bees annually and aspires to extend this to 100 million. It is achieving this by being at the forefront of ethical bee welfare standards, and through its global partnerships with dedicated beekeepers and rescuers, uniting efforts to protect hives and uplift the welfare of bees.
Another key aspect of Comvita’s Harmony Plan is nurturing biodiversity and restoring natural ecosystems. It is planting native bush and trees across New Zealand and has plans to do so in China. It has committed 1 per cent of its profits to local communities, giving employees a day off each year to help people in the communities around them.
Chen told the China Business Summit that these narratives, underpinned by tangible and demonstrable actions, are resonating well among its customers — particularly those residing in Tier-1 Chinese cities such as Beijing, Shanghai and Guangzhou — and have enabled Comvita’s remarkable growth in the region to continue.
“We are real, we are genuine, and we are leveraging our industry knowledge and expertise to help people and the communities wherever we go,” he says.
New Zealand’s thriving tourism and export education links with China were heavily impacted during the pandemic years, enduring significant challenges and setbacks. The reopening of borders has seen a remarkable revitalisation of these connections. The return of foreign tourists has been a prominent bright spot for New Zealand’s economy, and there has been a notable increase in study visa approvals, particularly for universities. This panel will share perspectives on the changed landscape, including new strategies adopted to rebuild business, and the inspiring wins and war stories that have emerged along the way, showcasing the resilience and adaptability of the sectors.