Nearing the end of 2025 Aotearoa-New Zealand stands at a pivotal moment in the transition to a low-emissions, resilient, and nature-positive economy. While significant progress has been made in recognising sustainability as a core business imperative, the pace and depth of change remain uneven.
A clear renewal of purpose and pace is required. While change can seem daunting, it remains essential. Planned and proactive transitions generally support stability and agency; by contrast, reactive or imposed change tends to generate uncertainty, resulting in significant disruptions for organisations, livelihoods and communities.
Rising expectations and emerging leadership
Over the past three years, climate-related financial disclosures for large listed companies and financial institutions have reshaped governance expectations. More organisations are beginning to report their environmental and social impacts, and the discourse around sustainability has broadened. Circular economy principles, nature-positive strategies, and Te Tiriti-aligned approaches are increasingly visible in corporate narratives.
There are promising examples across sectors. Some sectors are quietly improving climate action targets, reporting, planning and performance. Exporters find that in many markets environmental credentials and authenticity matter. Therefore they need to continue to improve performance in these areas.
The implementation gap
Yet structural challenges persist. Nationally, per-capita emissions remain among the highest in the OECD, and while reporting is improving, the depth and substance of the reporting varies considerably. Many organisations acknowledge climate risk but have yet to articulate credible transition pathways, particularly on Scope 3 emissions and adaptation planning.
Small and medium-sized enterprises, which are vital to New Zealand’s economy, are constrained by time and often lack the data systems and capability required to measure environmental performance or respond to evolving supply-chain demands. Working with consultants to develop carbon measurement and management systems is also expensive. This is a tricky gap, as while SMEs individually often do not emit significant greenhouse gases, cumulatively it all adds up.
Currently, policy and regulation seem to be going in the wrong direction. Recent changes to the Climate Risk Disclosures Framework have reduced the number of companies and fund managers reporting on their climate risks. The loosening of thresholds for those required to disclose creates concerns around coverage and comparability. With fewer entities disclosing, the risk is that it will reduce the framework’s reach and potentially hinder comprehensive analysis of climate risk across sectors. In addition, the proposed reforms may reduce ambition and alignment with international best practice.
Another example of the retreat from New Zealand’s earlier climate commitments was the decision to lower biogenic methane reduction targets. Rather than maintaining the previously-legislated trajectory in line with international scientific consensus and the Paris Agreement’s 1.5°C pathway, this change in targets privileges short-term economic and political considerations over long-term climate integrity and intergenerational responsibility. Reducing the target range risks undermining global credibility and postpones the structural transformation of the primary sector by delaying the adoption of emissions-mitigation technologies and land-use diversification strategies.
These structural challenges may seem to suit business but in the medium and long term they fail to provide the enabling conditions and set the level playing field needed to support the change that is happening. Ultimately, delaying decisive policy action fosters uncertainty, hampers innovation trajectories and risks leaving firms and communities exposed to more abrupt regulatory and market adjustments in the future.
The value of indigenous knowledge and local solutions
A uniquely Aotearoa pathway is emerging, one that is grounded in mātauranga Māori, kaitiakitanga and te taiao principles. Co-governance models, iwi-business partnerships and community-centred circular economy initiatives illustrate how sustainability can be culturally grounded and socially inclusive. These approaches emphasise stewardship, intergenerational responsibility and relationships with land and water representing principles increasingly recognised internationally.
However, many organisations remain at an early stage in genuinely embedding these frameworks. Having the capacity to move from symbolic engagement to substantive performance and partnership will be critical and necessary over the next decade.
Looking ahead
The transition to a sustainable economy offers New Zealand immense opportunity: global market differentiation, sustainable livelihoods, community resilience and alignment with long-standing cultural values of care for the environment. The challenge is urgency and for some, motivation for change. To maintain credibility and competitiveness, New Zealand businesses must move beyond compliance and into innovation, transparency and long-term thinking.
As a nation, we have the values, the knowledge, and the creativity to lead. What is required now is commitment to action at scale, anchored in partnership, informed by evidence and guided by a shared responsibility to future generations. In 2026 we have the opportunity to change — will we continue to privilege out-dated thinking or will we start to embrace a forward-looking, just and resilient transition that aligns our economic ambitions with the wellbeing of people, whenua, and the climate?
Prof Sara Walton is tumuaki/head of department at Te Mātauraka Whakahaere/Department of Management, University of Otago.
