By Karen Silk*
It's too easy to put off climate change until tomorrow.
Immediate, pressing, and individual priorities like paying bills, serving customers, or just buying the next consumer product, overtake the distant and shared problem of a warming world.
But, at some stage New Zealand will need to speed up tackling climate change if it's to meet its obligations under the Paris Agreement.
Based on research we commissioned from EY and Vivid Economics, there could be a cumulative $30 billion boost to GDP by 2050 if Government and industry are proactive rather than reactive in dealing with climate change.
Furthermore, if we are slow to act the carbon price, which will be an increasing factor in prices for a range of household goods, could end up 48% higher than otherwise. That would impact every household in New Zealand.
Westpac asked EY to model the effect on the economy of two scenarios - taking action earlier and taking action later and having to play catch-up.
So what would early and concerted action look like?
In practice, this could mean the uptake of new technologies, electrification of passenger and freight vehicles, changes in land use towards afforestation and the phased introduction of agriculture to the Emissions Trading Scheme from 2020.
The researchers tested this possible chain of events against an alternative "shock" scenario in which substantive efforts to reduce our emissions are delayed until 2030.
At that point, New Zealand would be forced into action by external factors, perhaps through the threat of trade tariffs or something similar.
Were that to happen, the pressure of a sudden and dramatic transition to a low carbon economy would create greater disruption across our economy, suppressing growth and probably having an impact on jobs.
Crucially, the EY analysts say agriculture performs better economically if producers are subject to an early and phased transition to the ETS, rather than joining in late in a more abrupt way.
The new report comes to the conclusion that a gradual adjustment to the structure of the economy - including agriculture - will provide greater certainty to business, a more gradual adjustment for households, and reduce the efficiencies lost through rapid price-driven resource reallocation.
As a specialist in minimising financial risks and maximising opportunities, we make it our business to advocate for market structures that foster sustainable growth.
It's why we've previously pushed for an independent Climate Commission, which would set hard targets around emissions reductions.
We think it would provide clarity and certainty to industries, and allow them to plan more effectively.
At this point you might be wondering what Westpac is doing to address the effects of climate change.
In New Zealand, we have cut our own carbon emissions by 55% since 2008 and continue to make further reductions. We offset the remainder through the purchase of New Zealand carbon credits to be carbon neutral.
Since 2012, we have also reduced lending to companies involved in fossil fuel mining and production by 55%.
And, we've lent more than $1.5 billion to green businesses and want to lift that to $2 billion by 2020.
Some businesses and households will hold the view that adapting industrial and social practices too suddenly will present a substantial risk.
I understand that thinking, but would argue that the greater risk - commercially, financially and certainly environmentally - lies in inaction.
Change is coming.
I encourage businesses to set the pace rather than try to play catch-up down the track.
*Karen Silk is Westpac NZ's general manager of commercial, corporate and institutional banking.