Decarbonisation in action: insights from our sustainability and climate leaders

The path to decarbonisation can be a tricky one to navigate for many organisations. But the opportunities that come with tackling those multifaceted challenges are huge.

Will Symons, Deloitte’s Asia Pacific Sustainability and Climate Leader, met with key clients in New Zealand in early March to discuss this issue. The discussions highlighted the complexities of transitioning to a low-carbon economy, the role of regulatory frameworks, and the strategic moves already taken by other countries and corporations.

Here are some critical takeaways from those conversations.

The reality of decarbonisation

While grid decarbonisation might appear straightforward, the broader landscape is fraught with significant challenges.

Sectors such as steel, concrete, gas, and aviation face enormous costs in transitioning to greener alternatives. This underscores the need to acknowledge decarbonisation is a generational transition, requiring sustained effort and investment over decades. But embracing these challenges could place New Zealand at the forefront of decarbonisation efforts.

Global perspectives on clean energy

The global landscape of clean energy is evolving rapidly. China has emerged as a frontrunner, with significant growth in clean tech sectors such as electric vehicles (EVs), solar, wind, batteries, and electrolysers. China accounted for 30% of global growth in 2023, with 40% of this in clean tech. The country exported five million cars last year, a substantial increase from one million in 2020, with most being EVs.

India, on the other hand, is charting its own path, aiming to reduce reliance on Chinese imports by banning solar panel imports and building local supply chains. The operational expenditure of solar and battery technologies in India is now cheaper than coal, signalling a significant shift towards low-cost renewable energy.

New Zealand’s renewable energy offers a competitive advantage, however, how to use this beyond being a market taker is still up for discussion. There is, however, growing interest in data centres in New Zealand – the country could position itself as a training location for AI, given those renewable energy sources can power those centres more sustainably.

Preparing for the future

The importance of scenario planning and adaptability was a recurring theme. Organisations must define clear pathways, understand their current position, and be prepared to switch strategies based on external decisions, such as the introduction of affordable Chinese EVs into new markets.

Monitoring key decision points and maintaining clarity with regulators will be key to navigating the uncertainties ahead.

Nature and corporate responsibility

The talks around nature conservation revealed a shift from impact-driven initiatives to disclosure and measurement frameworks like CSRD (Corporate Sustainability Reporting Directive) and TNFD (Taskforce on Nature-related Financial Disclosures). This pivot, while essential for transparency, poses risks if it diverts attention from integrating nature into core business strategies.

Corporations are challenged with embedding environmental considerations into their value drivers, and there's a consensus that voluntary actions alone won't be enough. Enhanced regulation is important to ensure corporate dependencies and risks related to nature are addressed. Good regulation can lead to good business, suggesting New Zealand could benefit from further developing and enforcing high environmental standards, while also balancing the new for strong economic growth.

Looking forward

The path to decarbonisation is complex and requires a multifaceted approach. While progress is being made, particularly in grid decarbonisation and clean tech advancements, big challenges remain in other sectors. The role of regulation, corporate responsibility, and strategic planning is essential.

As we move forward, we must maintain a balance between immediate actions and long term goals, ensuring that the transformation to a low-carbon economy is both sustainable and inclusive.

If your business is on its decarbonisation journey, Deloitte’s Sustainability & Climate team has a series of reports offering strategic tips for remaining competitive and resilient in this space.