Collaboration and data give rural land investor a climate edge

Since the introduction of climate reporting standards in New Zealand in 2022, about 200 listed companies and large financial entities have entered a new era of planning, disclosure and accountability.

In its September 2024 evaluation of the first round of climate reporting, Chapman Tripp noted the requirement to describe emissions reduction targets aligning to a 1.5°C pathway meant “attention is now squarely turning to whether companies have credible transition plans to deliver those targets and are investing to achieve them”.

The law firm also noted transition planning was still a work in progress for many climate reporting entities (CREs), with only about a fifth of entities voluntarily disclosing transition planning aspects of strategy in their first reporting year.

During Chapter Zero New Zealand’s three-part webinar series about transition planning, speakers reiterated an effective process requires the full involvement of the board and whole-of-organisation input.

NZX-listed rural property investor New Zealand Rural Land Company Limited (NZL) did all this and more when becoming the first local agricultural and rural land company to release its Climate Related Disclosure for FY2024.

Its development centred on close collaboration involving the board, management and an expert advisor (Lever Room), and on transition planning grounded in three climate scenarios and robust data.

The company owns 17,238 hectares of high-quality rural land in New Zealand, fully tenanted on long-term leases with regular CPI-adjustment provisions. NZL generates shareholder value through a combination of asset value appreciation and cashflow from its long-term leases.

In the introduction to its climate report, NZL said its transition plan commitments went beyond decarbonisation opportunities within its value chain. “We are also focused on enhancing climate resilience across our existing portfolio and integrating climate-related risks and opportunities into our acquisition strategies for short-, medium- and long-term planning.”

Rob Campbell CFInstD

Chair Rob Campbell CFInstD said sustainability of the land NZL owns and leases was built into the company’s kaupapa. “When the requirement came up to do this kind of reporting, we were more than open-minded about it. NZL is here for the long term, and our climate disclosure exercise made us consider our assets in the context of what the world might look like in a 20- to 30-year timeframe.”

While the transition planning process initially looked daunting, the decision to bring in external expertise meant the board and management were guided along a systematic pathway.

“We were all struck by the level of detail Lever Room and management uncovered that enabled us to look at specific pieces of land down to very specific levels of detail.”

NZL’s analysis drew on global climate scenarios from the Intergovernmental Panel on Climate Change, adapted to New Zealand’s context using advanced modelling from the Deep South National Science Challenge.

At the heart of this work is the New Zealand Earth System Model – a data-driven simulation platform often referred to as the ultimate “climate crystal ball”. This high-resolution model integrates vast datasets and enabled NZL to anticipate and prepare for a range of future climate pathways with scientific precision.

“The data helped us learn a lot about the land we own, as well as how we will apply systematic scenario-based assessments to future potential acquisitions. We have the data now to interrogate future acquisitions at a much more specific level.

“The scenario exercise resulted in positive assessments of the land we currently own.”

Going beyond compliance, NZL proactively measured and publicly disclosed its complete carbon footprint – including Scope 1, 2 and 3 emissions – well ahead of mandatory requirements.

Campbell said directors need to be curious and there was no reason to delay action on upcoming Scope 3 disclosure requirements.

“We knew we would have to do it in the future, and not doing it now seemed like a bit of a cop-out. We thought it would be useful to us. It involved a little more work, but it helped us better understand our land assets. Why wouldn’t we as a board try to understand our assets as deeply as we could?”

Reflecting on NZL’s immersion in transition planning, Campbell said directors and management gained a lot from the process.

“This exercise brought back the reality of the land we own. It was interesting – that in itself is a reason to do this work. You learn things about a business you might not learn via other lenses. It forces you to think long term – all boards have a responsibility to do this.”

Anthem is the official communications partner of Chapter Zero NZ.