Power companies lead charge on cutting emissions

A new analysis of the biggest companies on the New Zealand stockmarket found only 18 had a consistent trend of lowering their emissions.

Of the 61 companies studied by investment firm Forsyth Barr - representing 97 percent of the stockmarket by value and 13 percent of New Zealand's emissions - 37 had been reporting their greenhouse gas emissions for at least five years.

Of those, 18 had reduced their emissions and several had increased them over the five-year period.

Forsyth Barr's head of Environmental, Social and Governance, Katie Beith said the trend was positive considering that last year only 13 companies showed reductions.

"We only map a trend if a company has been reporting for more than five years," she said.

"We won't say a company is reducing emissions if it has been reporting data for less than five years because we don't think it's long enough to have a trend, and there's a lot of volatility," she said.

"It takes a while to turn the tanker around, so I think it is encouraging to see those that have been doing the hard work for a while now and measuring for a while… starting to move in a positive direction," she said.

Beith acknowledged time was getting tight to cut emissions to meet New Zealand's targets and global climate deals.

"We are in a critical decade where we have to turn the tide on emissions. It's just not easy to do, even in New Zealand where we have a predominantly renewable energy grid."

Of the 37 companies with five years of records, 32 had lowered what's known as emissions intensity (often measured as greenhouse gases produced per unit of revenue or product).

But Forsyth Barr said "intensity decreases do not necessarily solve the problem that, globally, we urgently need to turn the tide on emissions".

Power companies heading up

The report found electricity companies were the best performers when climate, environmental and social measures were considered together, with Meridian Energy, Contact Energy, and Mercury occupying the top three spots and Genesis moving up the ranks to enter the top category of "leader."

The report found the gap was widening between the leaders and the laggards, with the top-rated companies doing more to reduce their impacts since the previous year and the bottom ones falling further behind.

Of the 61 companies assessed, 50 (82 percent) had set net zero or emissions reduction targets, an increase from 76 percent last year and 69 percent the year prior.

The biggest improvers across carbon, governance and social measures were power company Manawa Energy, finance company Heartland Group, and The Warehouse Group.

The top carbon performers included Meridian, Mercury, Precinct Properties, Contact, retirement village company Summerset, Goodman Property Trust, campervan business Tourism Holdings Limited and Auckland Airport.

The stock exchange's biggest emitter was Fonterra, which is also New Zealand's biggest emitter, followed by Air New Zealand and Auckland Airport.

The biggest emissions reduction in the survey was clocked by Channel Infrastructure, which recently closed its oil refinery operation, followed by Genesis and commercial property business Property For Industry.

Freightways had the biggest emissions increase over five years, followed by produce and petfood company Scales and Air NZ.

However 24 companies did not have long enough records to declare a trend.

The report noted some of the lower performers on carbon had announced big projects that would lower their future emissions.

Forty companies had publicly announced new projects or partnerships that would lower their emissions by at least 10 percent, the report found.

"Game changing" announcements, according to Forsyth Barr, included A2 Milk's announcement of an electrode boiler at its Mataura Valley Milk factory, completing the plant's conversion from coal to electricity and lowering emissions by 45 percent.

Genesis trialling using biomass instead of coal at Huntly also qualified as a game changer in the report, as did New Zealand King Salmon investing in a plant to remove waste from landfill use to to create electricity.

Spark's 10-year deal with Genesis to buy renewable electricity from a solar farm also rated a mention.

Bucking the trend on science-based targets

The report found New Zealand companies had largely bucked an international trend to pull back from or fail to meet targets set using the non-profit Science-based Climate Targets initiative, with Air New Zealand the only high-profile company to abandon its target here.

"There has been a pull back in climate aspirations by some large international corporates as awareness of the practical realities of meeting those aspirations set in," the report said.

"More than 200 companies had their net zero commitments 'removed' by the Science-Based Targets initiative in February 2024, including some of the best-known names in corporate sustainability," it said.

"Diageo, Vestas Wind Systems, Unilever, Proctor & Gamble… were among the firms that missed the deadline to set full net-zero targets, or have chosen not to use [the science-backed] standard."

Forsyth Barr said while the Science-Based Targets initiative had experienced issues it remained the most robust option available globally for setting targets.

NZX-listed companies using the tool included Contact, Fisher & Paykel Healthcare, Genesis, Infratil, SkyCity Synlait Milk, Summerset, Fonterra and Ryman.

The report's authors noted there was now a level playing field on carbon reporting, unlike 2017 when the firm started looking at company emissions.

This year all companies reported their direct emissions and 85 percent reported supply chain emissions, compared with 41 percent and 33 percent respectively in 2017.

Other environmental and social factors fared worse than carbon emissions.

Waste sent to landfill rose for all but 11 of the 23 companies that have been reporting on waste to landfill for more than five years, said the report.

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