Why the same actions driving growth can also cut emissions

It’s no secret that New Zealand faces a long-standing economic challenge. For more than five decades, labour productivity has lagged behind comparable OECD economies, limiting income growth, constraining fiscal capacity and leaving the country increasingly exposed to global shocks.  

At the same time, expectations around emissions reduction, energy security and sustainability have moved from the margins of economic debate to its centre. 

These challenges have often been presented as competing priorities, but now a new, business-led report released by the Sustainable Business Council (SBC) and Climate Leaders Coalition (CLC) is challenging that assumption. 

The findings, insights and analysis of Driving Sustainable Growth: Opportunities for New Zealand’s Economy reveal the actions required to lift productivity and strengthen long-term economic performance are the same actions that can reduce emissions and improve resilience. Pursued together, they reinforce one another. 

SBC Chief Executive Mike Burrell says New Zealand has a real and achievable opportunity to drive stronger, more sustainable economic growth while simultaneously reducing emissions – and the economic prize is significant. 

A material economic opportunity 

Using economic modelling, international evidence and New Zealand business case studies, the report quantifies this opportunity. It finds that a transition towards an innovation-driven economy, underpinned by abundant and affordable renewable energy, could lift GDP by more than $22 billion per year by 2035, rising to more than $33 billion per year by 2050, compared with an approach that relies only on the current carbon price trajectory. 

The scale of the uplift would materially strengthen New Zealand’s fiscal position, supporting investment in infrastructure and public services, lifting incomes, reducing debt and improving the country’s ability to respond to future shocks. 

Importantly, the same pathway would also reduce national emissions by an additional 6% per year by 2035, rising to 22% per year by 2050. 

How the system works 

The report identifies four reinforcing forces that, when aligned, drive these outcomes: 

• • Stable and enduring policy settings 
  • Abundant, affordable renewable energy 
  • Accelerated innovation and productivity 
  • A credible, predictable carbon price 

With cost reductions, efficiency gains and competitiveness improvements compounding, the report shows how these elements operate as a system, rather than as independent levers. 

Electrification and digital technologies sit at the centre of that system. Electrified assets are more energy efficient and often cheaper to run over their lifetime, digital tools enable automation, optimisation and entirely new business models, while targeted innovation and R&D accelerate the diffusion and scale-up of new solutions, translating directly into productivity gains. 

Burrell says a credible carbon price plays a supporting role. It reinforces these shifts by rewarding organisations that move early and efficiently, turning productivity improvements into sustained competitive advantage rather than acting as a blunt compliance mechanism. 

Already happening in business 

Crucially, the report shows these dynamics are already under way in New Zealand businesses. Case studies across sectors such as agriculture, ports, energy, manufacturing and digital infrastructure demonstrate firms investing in electrification, process heat transitions, digital optimisation and value chain redesign because the economics stack up. 

These are commercial decisions. Business is acting not because it’s being told to reduce emissions, but because these investments lower costs, manage risk, strengthen resilience and improve competitiveness. Emissions reductions come alongside that – not instead of it. 

It underscores that sustainable economic growth requires aligning financial and environmental outcomes, and understanding how strategy, capital allocation, risk management and long-term value creation are evolving together. 

What’s holding progress back 

If the opportunity is clear and business action is already visible, what’s holding progress back? The report’s answer is straightforward: it is not a lack of ambition, ideas, technology or capital. The binding constraint is policy certainty and coherence over the medium term. 

Businesses invest in long life assets (energy systems, infrastructure, technology and skills) with payback horizons often measured in decades. Those investments require confidence that core policy settings will endure long enough for returns to be realised. 

New Zealand has successfully applied that discipline in other areas of economic policy, including monetary policy, superannuation and trade. The report argues that extending the same long-term approach to the foundations of sustainable economic growth is what will unlock the prize identified. 

International experience reinforces this conclusion. Economies such as Denmark, the Netherlands and Singapore have demonstrated that productivity growth and emissions reduction can progress together when energy, innovation and policy coherence are aligned. The report suggests New Zealand is well placed to follow a similar path, leveraging its own economic structure and unique strengths. 

A partnership call to action 

The report sets out 10 key recommendations for joint action by both business and government. Importantly, they build on strategies and evidence already in place across successive governments and are focused on the first phase of the opportunity before us. 

This work focuses on moving from insight to action, and committing to the stable, enduring settings that allow business and government to work together over the medium term to achieve economy-wide change. 

Released amid global energy volatility, cost of living pressures and growing climate impacts, the report makes a clear case that long-term thinking is essential.  

A more productive, resilient and sustainable economy leaves New Zealand better placed to weather shocks, support communities and create prosperity for current and future generations. 

For boards and directors, sustainable economic growth is now central to economic strategy, organisational resilience and long-term value creation. 

Read a copy of the report’s Executive Summary here, or a copy of the Full Report here.