Sustainability and Business Performance: What NZ Manufacturers Are Telling Us

Most manufacturing CEOs recognise the business value of sustainability, but finding the money and building a sound business case for investment is another matter.

That's one of the messages coming through in Creating Long-Term Sustainable Value, a new report from the Leadership and Governance Collective, drawing on responses from 1,089 New Zealand CEOs, including 106 from manufacturing.

I've been looking through the findings, and there are some interesting points for our industry as we consider what the transition to a low-emissions circular economy for plastics will mean for businesses and their future investment decisions.

For plastics manufacturers, the transition to a productive, circular economy raises some significant commercial questions. What technologies and capabilities should we be investing in? How will customer requirements and markets change? And how do we remain competitive as the economy moves towards lower emissions and greater circularity?

Of course, recognising the value of sustainability and being able to justify the investment are two different things.

The research found that 55% of manufacturing CEOs identified high initiative costs as a barrier, 49% were concerned about uncertain returns on investment, and 47% highlighted the costs of measurement and reporting.

I suspect very few of our members will be surprised by those findings. Businesses are having to weigh potential long-term benefits against immediate costs, competing priorities and uncertain market conditions.

The role of government and industry

The research also provides some useful evidence for our discussions with government.

When asked what government and industry bodies could do to support sustainability goals, 69% of manufacturing CEOs identified financial incentives to accelerate investment. This was 14% higher than the wider for-profit sector.

For plastics, transitioning to a low-emissions circular economy requires investment both within individual businesses and across the wider value chain. Manufacturers can make decisions about their own operations, technologies and products, but circularity also depends on commercially viable collection and reprocessing systems, reliable markets for recovered materials and the infrastructure to support them.

These are not challenges that individual businesses can solve on their own.

For me, the findings reinforce the importance of consistent, long-term policy settings that give businesses the confidence to invest. We need approaches that support our environmental objectives while recognising the commercial realities of manufacturing and resource recovery in New Zealand.

Is sustainability getting enough attention at board level?

One finding that particularly caught my attention was the apparent gap between recognising the value of sustainability and formally overseeing its performance.

While 80% of manufacturing CEOs believe sustainability investment adds value, only 23% reported that their board structures fully oversee sustainability performance metrics.

That doesn't necessarily mean other boards aren't considering sustainability, but it does raise an interesting question about how businesses are incorporating longer-term environmental and social considerations into their strategies and investment decisions.

For our industry, this is particularly relevant. The transition to a low-emissions circular economy won't happen overnight, and decisions made today about equipment, technology, products and markets may have consequences for many years.

It's worth asking whether we're giving these longer-term considerations enough attention when making business decisions, and whether sustainability is being considered as part of future business performance rather than simply another cost or compliance obligation.

Looking ahead

For me, the research reinforces something we've been discussing across our industry for some time. There are opportunities in the transition to a low-emissions circular economy, particularly around innovation and future competitiveness, but making the most of them requires sound commercial decisions and the right conditions for investment.

Individual businesses will need to consider how they adapt and where they invest. Plastics NZ also has an important role in advocating for the policies, infrastructure and industry collaboration needed to support that transition.

The full report and manufacturing dashboard are worth a look, particularly if you're involved in business strategy, investment or governance.

Read the report and access the manufacturing dashboard

Rachel Barker
Plastics NZ CEO

Sustainability & Commercial Performance

According to the research, 80% of manufacturing CEOs believe investing in environmental and social practices adds value to their organisations. Manufacturing CEOs were also 11% more likely than other for-profit CEOs to report that their sustainability approach positively influences innovation.

I think that's an important point. Sustainability is often discussed in terms of environmental responsibility or regulatory compliance, but it also has a role in how businesses innovate, manage risks and plan for the future.