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Findings from Harbour's carbon emissions research project

Jorge Waayman
Jorge Waayman | Posted on Nov 14, 2019

Harbour has long considered and integrated ESG considerations in its investment process. Climate change has been an evolving focus as growing empirical evidence and political, regulatory and investor pressure on the materiality of climate change escalates.

To further understand how climate change is being treated by New Zealand companies, Harbour has conducted a research project to establish a baseline of carbon emissions disclosure across the market and to promote positive change through engagement. The project covered 55 companies listed on the NZX.
Key points
  • 26 companies of the 55 studied disclosed emissions data (47%)
  • There was wide variation in the quality of disclosure from companies
  • Of the companies that disclosed, 52% had emissions on a decreasing trend
  • Most companies record their emissions themselves and have no third-party verification
  • Technological advancement is key with innovation in electrification, carbon capture and storage, and software solutions
  • The Zero Carbon Bill, the Paris Agreement and the Emissions Trading Scheme are all important policy settings aimed to help decrease carbon emissions
  • The Task Force on Climate-related Financial Disclosures (TCFD) recommendations are an increasingly popular framework for companies worldwide to report against, to ensure their climate change disclosure is meeting the needs of their investors.
State of carbon disclosure

During the data collection process, we assessed the carbon emissions disclosure of 55 companies listed on the New Zealand Exchange (NZX). Only 26 of these companies disclosed their carbon emissions in some form, representing 47% (or 76% by market capitalisation). Many of the companies had little to no information on how their business was impacting on the environment. Companies varied in the quality of their emissions disclosure with some only providing their total emissions while others differentiated between direct and indirect emissions. Some companies chose to disclose their emissions using a relative measure such as emissions per store/customer in order to standardise for growth in the business, however this does limit comparability across the market.

From the companies that disclosed emissions data, 52% had their emissions on a decreasing trend or had significantly reduced their emissions since their base year. This is encouraging but faster and more drastic changes will be required in order to meet the various climate change targets from policymakers.

At the country level, New Zealand’s gross emissions were recorded at 80.9m tonnes of CO2-e[1] in 2017, a 23% increase from 1990 levels with the largest contribution from the agriculture sector (48%) followed by the energy sector (41%).[2] The total reported emissions from our study were 47.7m tonnes of CO2-e which shows that some of the large emitter companies assessed are significant contributors to New Zealand’s carbon emissions.


Source: Harbour

In terms of carbon disclosure in the listed company space, most companies in the highest emitting sectors like agriculture, energy and transport reported their emissions - while other sectors such as financials, healthcare and IT had very few companies with carbon emissions disclosure. This likely reflects the perceived materiality and relevance of climate change to each sector.

A key limitation in the data is the measurement methodology, given that most of the data is company-reported and lacks external verification. Only eight of the companies analysed had attained a CEMARS (Certified Emissions Measurement and Reduction Scheme) certification which involves a third-party audit of the emissions data. However, this is starting to improve with companies such as Fletcher Building outlining in their latest annual report that they have revised their previous years' carbon emissions down after conducting an external audit during the year.

The project also included analysis of the proportion of companies involved in carbon offsetting. Offsetting involves initiatives that lead to reduced carbon in the atmosphere, such as investments in planting trees. We found that 22% of the companies analysed were involved in carbon offsetting with some looking to offset all their direct emissions. Carbon offsetting is expected to grow as companies start to focus on their net emissions and neutralise the emissions that they cannot reduce further.

In addition, this study investigated whether companies were involved with industry initiatives on climate change such as contributing to the CDP, the Science Based Targets initiative and the Climate Leaders Coalition. These initiatives involve either reporting climate-related data and/or being held accountable publicly through carbon emission targets aligned with science and the Paris Agreement. 40% of companies in this study were involved with at least one of these initiatives and this is starting to grow, particularly with the Climate Leaders Coalition which has now risen to 122 signatory organisations.

Corporate engagement

We also followed up on these findings by engaging with companies who were lacking in disclosure and those who performed well. The purpose of this engagement was twofold: firstly, to gain further insight from the leading companies to incorporate into the research and secondly to seek explanations and promote change for the laggards in disclosure.

The leading companies that were engaged gave detailed explanations of the actions they were taking including the identification of climate risks on their business operations and scenario analysis for different global warming outcomes. Some companies lacking in disclosure highlighted that climate change was not a priority or a current risk for them and the cost of measuring and recording the emissions data was too high for the impact they felt their company was having. Some companies were receptive to the feedback and were willing to work on this going forward, while others had no plans to change their current efforts.

From the latest reporting season, it was encouraging to see increased disclosure on carbon emissions with two companies (Synlait Milk and a2 Milk) measuring and reporting their emissions for the first time. a2 Milk did acknowledge the limitations in their measurement with the aim to improve the accuracy over time but it is a positive first step, nonetheless. During a post-result meeting, the company noted Harbour’s push towards the climate change disclosure as well as the CEO’s own ambition to become a leader in the space.


The influences on carbon emissions reduction are changing with the role of technology and policy having a greater effect.


Technology is having a large impact on reducing transport emissions with the number of electric vehicles rising around the world, particularly in Europe, displacing internal combustion engine vehicles. Some companies in New Zealand are getting involved through transitioning their fleets to EVs and the latest recommendations from the Interim Climate Change Committee have promoted EV transition as a primary mechanism to achieve lower emissions compared to moving to 100% renewable energy.[3] A recent innovative electrification example includes Port of Auckland who contracted a Dutch company to build the world’s first electric tug to replace their existing diesel tug which reached the end of its useful life. The transaction represented double the outlay cost but is expected to be cheaper over the life of the asset. It will lead to a substantial reduction in emissions over the long term and supports the company’s target of being carbon neutral by 2040.

Carbon capture and storage is another technological innovation to reduce carbon in the atmosphere by capturing it from large, single point sources and transporting it to a storage site to be buried underground. However, it is an expensive process and may have limited potential in NZ relative to other countries given our high renewable energy mix. Technology is also being used to optimise air travel routes and video conferencing software is increasingly used as a substitute for long distance meetings to reduce transport emissions. Technology will continue to play a large part in providing innovative solutions that will be needed in order to achieve the targets set by policymakers.


Political impact on climate change is continuing to grow. The Paris Agreement and the Zero Carbon Bill are both increasing the pressure on reducing emissions.

New Zealand signed the Paris Agreement in 2016, committing the country to reducing emissions by 30% below 2005 levels by 2030. This is to ensure the global average temperature stays below 2 degrees Celsius above pre-industrial levels whilst also attempting to restrict the temperature below the 1.5 degrees Celsius increase.[4] These targets are supported by scientific research as part of the IPCC special report[5] from 2018 that shows the higher frequency of extreme weather-related events that would occur at different levels of global warming with the primary conclusion being that the world needs to be aiming for 1.5 degrees.

The Zero Carbon Bill commits New Zealand to reaching net zero carbon by 2050 as well as reducing methane emissions by 24-47%. The Bill is expected to be passed by the end of the year and the roadmap for achieving the target is to be guided through an independent Climate Change Commission that will provide a series of carbon budgets and other policy recommendations to Government. The primary tool for achieving these targets is New Zealand’s Emissions Trading Scheme (ETS).

The Government established the New Zealand ETS as a market-based mechanism in 2008 to help reduce emissions. The scheme puts a price on emissions in order to create a financial incentive by penalising businesses that emit and rewarding landowners that are planting forests. The efficacy of the scheme has been under scrutiny particularly during the 2011-2013 period where the carbon price plummeted due to imported carbon credits of dubious quality from overseas. Regulation changes were subsequently made to ban the use of certain international units and the carbon price has since risen to its current cap of $25.  The scheme also does not include the agricultural sector which comprises roughly half of New Zealand’s total emissions. The Government is currently reviewing the scheme and an ETS Amendment Bill is expected to be introduced to Parliament in the coming weeks along with a market consultation for feedback on the operational settings.

Policy settings are expected to be a growing driver for the economy transitioning to low carbon as policymakers will attempt to implement policy tools such as the ETS in order to meet the targets from the Paris Agreement and Zero Carbon Bill.

Task Force on Climate-related Financial Disclosures: a recommended framework

Harbour recommends that companies place more focus on analysing their climate change risks and consider adopting a reporting framework such as the TCFD (Task Force on Climate-related Financial Disclosures) recommendations. The framework will likely become the industry standard for companies reporting on climate risk and it continues to gain support from regulators and governments around the world. These recommendations encourage disclosure on the oversight and management of climate risks and opportunities impacting the company through eleven recommendations across governance, strategy, risk management, metrics and targets. This reporting should involve key functions of the business (financial, risk, compliance, investor relations) and not be siloed to the sustainability/marketing team. Although reporting against some of the recommendations can be onerous, it is useful to begin the reporting and aim to improve the quality of disclosure over time.




Harbour believes that climate change has significant and wide-ranging impacts across the economy, and those companies that manage their environmental externalities well are more likely to deliver long term, sustainable returns for shareholders. Our research has shown a wide variety in levels of disclosure about carbon emissions. While our findings were mixed, the overall direction shown by companies was positive towards increasing disclosure and offsetting measures.

Climate change factors are integrated into the Corporate Behaviour Survey, Harbour’s main tool for evaluating ESG considerations in relation to companies. We will continue to monitor and assess the environmental performance of companies as part of the investment process and tilt portfolios (where possible) towards those that are demonstrating positive and constructive behaviours.


[1] A unit of measurement for carbon dioxide equivalent





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