Deloitte Top 200: Sustainable Business Leadership: KMD Brands

Deloitte Top 200: Sustainable Business Leadership: KMD Brands

For the second year in a row, KMD Brands has been acknowledged for its relentless focus on sustainability, taking out the Deloitte Top 200 Sustainable Business Leadership award.

The global outdoor, lifestyle and sports company, formally known as Kathmandu Holdings, is the parent company to three iconic brands — Kathmandu, Oboz and Rip Curl.

Kathmandu gained B-Corp certification in 2019, becoming the largest Australasian retailer to be certified through the stringent process which recognises the highest standards of environmental and social performance. The company continues to push for sustainable practices with both surfwear brand Rip Curl and hiking footwear brand Oboz also working toward gaining B-Corp certification in FY23.

KMD Brands’ consistency and leadership in putting sustainability at the heart of its strategy, along with its strong targets and transparent approach was why the Deloitte Top 200 judges awarded it in this category again — a company they say others should compare themselves to as part of their own sustainability journey.

“Kathmandu has significantly influenced Oboz and Ripcurl and the three brands combined are making real evolutionary strides,” says Top 200 judge Hinerangi Raumati-Tu’ua. “KMD Brands’ focus on sustainability is broader than just themselves — they also work closely with their suppliers. It is clear that KMD Brands is focused on being a global leader in environmental, social and governance (ESG).”

Chief Legal and ESG officer at KMD Brands, Frances Blundell, says that love of and connection to the outdoors is a foundation for all the company’s brands. “We are very aware of our responsibility to protect and preserve the natural environment and the communities around it — otherwise there won’t be anywhere left for our customers and our products to get out there and enjoy.”

The judges were impressed with KMD Brands’ action towards its science-based targets to reduce emissions in line with the Paris Climate Agreement goals. It aims to reduce absolute Scope 1 and 2 emissions by a minimum of 47 per cent by 2030 from an FY19 base year, and absolute Scope 3 emissions by a minimum of 28 per cent.

Last year, KMD Brands secured what was then New Zealand’s largest sustainability-linked loan. The A$100 million loan is tied to ESG targets. In the first year, the emissions reduction target was achieved for Kathmandu, triggering a discounted interest rate.

KMD Brands’ transition to a circular business model will see it eliminate what it calls a “take-make-waste” approach to business. The concept now forms a core base for its work, including boosting the responsible material content in its products from materials that are regenerative, recycled or recyclable, bio-based, biodegradable, responsibly farmed or grown.

Blundell says the starting point for circularity is durability and making products that last many years and can be used for a long time.

“We want to avoid resources becoming waste and ending up in landfill,” she says. “This is a huge industry-wide issue. Each of our brands are setting their own specific goals, including using materials that can be regenerated, that come from recycled sources or can be recycled.”

As part of this commitment to circular thinking, KMD Brands is working on repurposing and recycling its own waste products. Taking neoprene offcuts from Rip Curl’s factory and recycling them into carpet underlay has diverted 133 tonnes of neoprene from landfill in the past year.

Rip Curl also introduced a world-first wetsuit take-back programme across Australia. It accepts wetsuits from any brand and repurposes them into soft-fall matting for playgrounds and outdoor gyms. The programme is now being expanded into the US, France, Spain and Portugal.

To ensure recognition of the interdependence between people and the planet is embedded into the mindset and expectations of employees, KMD Brands has amended its group code of ethics. ESG responsibilities have been added to job descriptions for all KMD Brands employees, and ESG-related objectives are now part of its employee goal-setting and performance review process. “The team is engaged with our sustainability values and motivated by the conversations happening in the business to embed ESG within decision-making,” Blundell says.

“Most people now know that they have a responsibility, and they want to contribute. Being part of something bigger than yourself is a really empowering feeling.”

Finalist: Meridian Energy

New Zealand’s largest renewable generator, Meridian Energy, generates its electricity from 100 per cent renewable sources — wind, hydro and solar.

Top 200 judge Hinerangi Raumati-Tu’ua notes Meridian has done a significant reset on its sustainability strategy that has driven ambitious targets and meaningful actions that are shifting the dial.

“It is good to see them embracing their role in New Zealand’s low carbon transition over and above ‘business as usual’ and committing capital in a way that is focused on delivering at pace given the urgency of climate change,” she says.

As part of its refreshed Climate Action Plan, Meridian plans to take ambitious action to achieve its “Half by 30″ target, reducing its gross operational emissions by FY30 from an FY21 baseline — including all scope 1, 2 and 3 categories.

Meridian has recently widened its focus from clean energy to bring a lens on “a fairer and healthier world”, which is driving a more holistic approach to its sustainability efforts.

This includes the adoption of the updated GRI (Global Reporting Initiative) standards that move away from evaluating materiality based on issues that immediately influence stakeholder decision-making to actual and potential positive and negative impacts on the environment, economy and people — including human rights.

Head of corporate affairs and sustainability Claire Shaw says this is part of the company’s efforts to future-proof its approach to sustainability.

“We have to act with integrity — which means doing all the big things really well, but also thinking about the impacts on others,” she says.

“You make different decisions when you put people at the heart of the transition. This is pushing us to think more broadly about ESG beyond delivering on decarbonisation.”

Since 2019, Meridian has achieved net zero carbon across the operations of its business. Where it can’t currently reduce its operational emissions, Meridian has purchased and surrendered gold standard, and verified emission reductions.

Meridian’s Forever Forests programme will see it displace this by creating its own carbon sink, investing in permanent forests in New Zealand and transitioning them to be 100 per cent native over time.

The judges were particularly impressed with how Meridian is leaning into its role to support New Zealand’s net zero by 2050 targets and its transition to a more sustainable, low-emissions economy.

Meridian continues to develop its renewable energy development pipeline to grow generation capacity, which will help the Government meet its target of 50 per cent of total final energy consumption to come from renewable sources by 2035.

Meridian continues to work with customers to accelerate the electrification of industrial heat away from coal and of transportation, and is exploring the economic, environmental and energy security opportunities of green hydrogen production.

Shaw says that Meridian’s size and scale means it thinks carefully about the impact of the systems that it operates in as it grows renewable energy for the country.

“We continue to respect our role as kaitiaki of the assets we are responsible for and we challenge ourselves to create long-term positive impact for New Zealand as a whole. If we do it well, we’ll unlock a future that’s good for tangata whenua, good for our customers, good for communities and our shareholders.”

Finalist: Fisher & Paykel Healthcare

Fisher & Paykel Healthcare (FPH) considers corporate social responsibility and sustainability to be inextricably linked to the way it does business.

The health equipment manufacturer, designer and marketer has a strong focus on the environment, responsible sourcing and efficient use of materials, waste reduction, and modern slavery, and has articulated its intentions in these areas in a new environmental and social responsibility policy.

“We have always had waste reduction optimisation in our DNA,” says Jonti Rhodes, vice president — supply chain, facilities & sustainability.

“But more recently we made a strong commitment to leaving a positive lasting impact on society and the environment. Not only through the products we provide, but also the environment, the community, and our carbon footprint.”

FPH recently formed a governance group with representatives from across the business to provide long-term strategic direction on how the business will continue to make progress in the most material areas.

The Top 200 judges note that there is real evidence of the company’s sustainability commitments and a clear intention to embed them into the nature of the business.

They were particularly impressed with the sustainability and social responsibility coverage in FPH’s annual report, and the balanced reporting that discusses the trade-offs between doing what is right for the patient and the many challenges to the environment this brings.

“Fisher & Paykel Healthcare has undergone a significant ramp up in sustainability initiatives in the last few years with key efforts on engaging with people across the business and making real change,” says Top 200 judge Raumati-Tu’ua.

“There is a real focus on key initiatives that can affect the wider industry and not just its own operations, including eco-design, sustainable packaging, bio-based and circular materials, and environmental lifecycle assessment.”

During the Covid-19 pandemic, demand for some of FPH’s key products increased by four to five times. This necessitated the need to work 24/7, resulting in higher electricity use and other direct emissions during the 2021 financial year.

But in the long term as Covid-19 diminishes, FPH is committed to decoupling carbon emissions from production levels. It has been piloting an internal carbon price during FY22 to factor carbon impact into its business decisions.

FPH has been measuring its carbon footprint since 2012, and since 2019 has set ambitious science-based targets for Scope 1 and 2 carbon emissions, along with a Scope 3 supplier engagement target.

It will launch a new sustainable procurement framework to suppliers in FY23 and FY24, selecting and collaborating with those that align with its values, while also providing education and support on relevant standards.

“As a large company, we have some resources that others don’t,” says Rhodes. “You can’t just expel those companies that aren’t meeting your standard — we are engaging the supply network and bringing them up to speed with what is needed.”

The judges also commend FPH’s efforts to nurture a positive and inclusive culture based on trust and respect. As part of this, it has established employee groups formed around shared identities and experiences and the judges recognise the improvement in the company’s diversity and inclusion statistics over the last year.

The Sustainable Business Leadership award is sponsored by The Aotearoa Circle.

Agribusiness: CEOs of NZ's largest exporters to China talk strategy (NZ Herald)

Agribusiness: CEOs of NZ’s largest exporters to China talk strategy (NZ Herald)

Miles Hurrell

Miles Hurrell is chief executive of Fonterra, the world’s largest dairy exporter.

This year marks 50 years of diplomatic relations between New Zealand and China, a significant milestone in the relationship with our largest trading partner.

Fonterra CEO Miles Hurrell says the dairy co-operative also entered the China market 50 years ago and it continues to be a strategically important market, receiving around one-third of its milk.

The dairy giant’s strategy in China is to meet the growing need of customers and consumers for high-quality nutrition and provide premium dairy to its people both online and in-store.

“China is an important part of the global industry supply chain. Innovation, sustainability and efficiency have seen us succeed over the past 40 plus years and we firmly believe these will underpin our future growth,” Hurrell told the China Business Summit which took place earlier this month.

Despite some softening due to Covid-19, Fonterra continues to see firm demand in China in the medium to long term.

China Business Summit 2022: Opening up panel – Education & Tourism

China Business Summit 2022: View from on the ground in Shanghai (panel moderation)

Surviving the Bears: Optimism in venture capital

Surviving the Bears: Optimism in venture capital

At the recent US Business Summit, Rocket Lab’s Peter Beck told the audience that the number one problem New Zealand entrepreneurs have is they don’t think big enough.

“Think bigger. Way, way bigger,” he urged. “If you’re starting a company, it is a hard painful thing to do. Don’t start a company with the aim of building a $100 million dollar company — build a $100 billion company and set your sights high.

“I was born at the bottom of the South Island in Invercargill, and if I can build a space company then anyone can do anything. There is no barrier.”

This view was shared by the local venture capital (VC) community at a recent panel event on venture capital, organised by the Angel Association New Zealand and NZ Private Capital. The panel said that while the differences of five years ago between the US and New Zealand VC firms are starting to coalesce, kiwi startups still need to learn aspirations from the United States.

However, some of this may be attributed to another difference the panellists identified – NZ companies tend to be much more capital efficient than US venture-backed startups.

 

“The US is probably looking for unicorns more,” said Movac partner David Beard, referring to startups valued by investors at more than $1 billion.

“Sometimes the decisions you have to make as a founder to be a unicorn require you to introduce significant risk to your business. In New Zealand, we are a little more balanced where we want our entrepreneurs at a fundamental level to succeed and work out what the measured risk is instead.”

The state of the economy

Given the current economic climate, operating as a VC in a bear market inevitably took centre stage at the panel discussion.

Beard explained that the nature of VC investing means that the current climate is negligible since investments, whether they were made over the past two years or will be made in the coming years, would not be realised until an initial public offering (IPO) or sale in a bull market.

“We might have a two-year hiccup, which will see a shift in mode setting from ‘growth at any cost’ to ‘growth with some efficiency around it’,” he said. “Founders and venture capital firms will need to make sure that they are making the best use of the money they have for the next couple of years — it’s about being a bit more sensible.”

A lot of big funds have been raised in recent years in the US, which has seen investors look worldwide for deal flow. Pitchbook data shows that VCs raised more money for new funds in the first quarter of 2022 than in the entirety of 2019.

But these new funds haven’t translated into more investments into startups, with VCs keeping ‘dry powder’ — uninvested capital — aside for existing portfolio companies in case they need more support than they have in the past.

Beard has started to see global funds retract. “We need to make sure we have companies we can fund in New Zealand through co-investment, and make sure the good ones get the resources and money they need over the next few years,” he said.

“Expectations of wildly growing high valuations and selling in three years might have been possible recently, but now we need to be more pragmatic.”

Punakaiki Fund’s Nadine Hill told the audience that the inflationary environment will provide fuel to help accelerate change.

“We saw in Covid how important technology solutions were for people. With inflation, it has never been more important to take costs out of business, and do business and life better,” she said. “We are not traders, we’re not trying to buy low and sell high, we are trying to build companies over the longer-term.”

GD1’s founding partner Chintaka Ranatunga shared this sentiment. While the next three years will likely see a higher failure rate among early-stage startups than in recent years, he also expects to see the creation of exciting new companies.

“This kind of environment is a great time to start something, we will see companies become stronger and have better access to talent,” he said. “Despite the doom and gloom, I am optimistic about the three-year outlook — remembering that for most of us it is a 10-year game, rather than a short-term one.”

ESG focus ever-present

An important aspect of a deep-tech VC’s role is to consider: “what is life going to be like in 2030?” — a world that might be without petrol and plastic.

To a certain extent, this means that ESG (environmental, social, governance) principles are naturally incorporated into decision-making.

GD1 continues to see significant demand from its institutional, private wealth and other investors to closely consider ESG metrics.

“We have a bunch of exclusionary criteria around sectors, along with ESG and diversity clauses in our term sheets,” said Ranatunga, with GD1 actively working on requirements for companies to report back.

Pacific Channel’s Kieran Jina said that investors in his deep-tech VC ultimately want to invest in things that will make them feel good.

“If you have a company that adheres to ESG principles, it is more likely to meet that requirement.”

But he acknowledges the increasing concerns of greenwashing and accurate reporting of ESG metrics.

“Measuring is always going to be problematic, and it can become very subjective,” he said.

“The harder aspect has been in the governance area.

“A lot of companies that come to us haven’t necessarily thought about that — if we applied a negative filter to our decision-making then there wouldn’t be a pipeline left.”

US Business Summit 2022: MC conference close (video)

PRIZE DRAW & SUMMIT CLOSE

Prize draw courtesy of Air New Zealand

Mat Bolland Chief Corporate Affairs Officer Air New Zealand with Auckland Business Chamber General Manager Events and Marketing Natalie Woodbridge

Conference close Tim McCready

US Business Summit 2022: New Zealand Story’s David Downs with Q&A (video)

KIWI VALUES KEY TO NEW NEW ZEALAND STORY

David Downs CEO New Zealand Story

New Zealand Story Group was established to enhance New Zealand’s reputation beyond natural beauty. In a competitive global economy, reputation matters. And it’s important for a country like ours, with an economy that relies on the strengths of its exports, to continue to grow and diversify.

The more we can do to ensure we’re all telling a broad, compelling and aspirational story about New Zealand, that’s grounded in our values and resonates with the world, the greater chance we have of attracting people to all that we offer.

Moderator: Tim McCready

US Business Summit 2022: Aerospace panel discussion (video)

NEW FRONTIERS IN SPACE
Speakers canvassed the exciting space frontier that Kiwi companies are leading, the work of the New Zealand Space Agency, and developments in aerospace that are helping to build strong links between New Zealand and the United States.
  • Catherine MacGowan Asia Pacific Regional Director, Wisk
  • Andrew Johnson Lead Space Policy and Regulatory Systems New Zealand Space Agency

Moderator: Tim McCready

US Business Summit 2022: Rocket Lab’s Peter Beck with Q&A (video)

PETER BECK Founder and CEO Rocket Lab

Founder and chief executive of Rocket Lab, Peter Beck, gave the opening keynote for the New Frontiers session at the US Business Summit. Peter is a pioneer in New Zealand’s accession in the space industry, growing to become a leading player in space, redefining the industry with the rapid and cost-effective delivery of innovative, high-quality technology.

Rocket Lab has deployed 110 satellites, with its Electron rocket the second most frequently launched US rocket annually, delivering mission success for commercial and government satellite operators.Speaking on the eve of the launch window for the CAPSTONE mission to the Moon, Peter shared with Summit attendees how his business has launched New Zealand into the forefront of deep space.

The year ahead is packed with missions, including the first launch to the moon from New Zealand’s Mahia Peninsula. Through this collaboration, Rocket Lab is demonstrating the strong partnership between New Zealand and the United States in this new frontier, as well as the leading role private business can play to forge bilateral relationships and pave the way for new areas of government collaboration.

Peter discussed how Rocket Lab has helped pave the way for New Zealand businesses to think bigger than our own backyard. Last year it listed on the Nasdaq Composite Index and has demonstrated that there is nothing holding New Zealand business back from becoming significant global players in new and exciting industries.

Moderator: Tim McCready

US Business Summit 2022: MC conference opening (video)

CALL TO ORDER
Tim McCready, MC