Developing our ingenuity the key to a more sustainable future?by Morgan.J
Continuing to develop our ingenuity may be the key to a more sustainable future.
New Zealand won’t become rich by digging up all our minerals and shipping them overseas – we need to be cleverer than that. But we will become better off investing wisely in our natural resources. Doing nothing is not an option.
Nicholas Martin of Mt Wellington, Auckland, writes: “At the end of her article (“The business of business”, December 22), Linda Sanders wonders if she has missed something. She rightly identifies that the business of business is money, but she fails to mention that most businesses have only a short-term focus and are mostly about profits for the next couple of years.
“This lack of concern about long-term implications and sustainable economic development is reflected in her investment in mining, an extractive industry, which by its nature is unsustainable. If properly managed, farming and forestry should provide much longer-term benefits for the economy and investors.
“For young people saving for retirement, are there any investment funds that invest in long-term sustainable businesses? That might be something worth investigating.”
I’ll look at his idea of sustainable investments in another column to complement what I’ve previously written about ethical investing.
This week, I’ll address his comment about mining being unsustainable. As a starting point, I will repeat my declaration of interest: I invest and work in the mining industry, including developing Chatham Rise seabed reserves of rock phosphate. Those opposed to mining argue minerals are finite, so once we use them up there are no more. On the face of it, that’s true.
The first point to remember is everything we use is either mined or farmed. There’s also a limited amount of land, the main raw material used for farming and forestry.
Although there are finite quantities of minerals, human innovation means we continue to discover more resources (our phosphate reserve is a case in point), change our use of minerals and manage resources better. Some minerals are renewable. In the Kermadecs, fluids rich in precious and base metals are continuously pouring out of active submarine volcanic vents, precipitating rich mineral deposits on the sea floor. This is close to being a renewable resource.
Former Business Roundtable head Roger Kerr, although sometimes extreme in his view, succinctly argued we can’t predict humanity’s long-term future needs, so it’s impossible to pick what is sustainable.
A couple of his examples: 100 years ago, many worried about running out of whale oil for lighting or firewood for heating. Back in the 1970s, copper reserves looked finite.
In the ensuing 30 years, we used most of the then-known copper stocks. But at the end of that period we had more than doubled known reserves. Meanwhile, substitutes such as fibre optics came into widespread use, lessening demand.
The same will happen with oil as we develop new technologies. As Kerr said: “While some natural resources may be finite, human ingenuity is not.”
A century ago, major cities were clogged with horse manure. Within a few years, with the invention of cars, the problem vanished.
Although farming and forestry may be considered sustainable, they use huge tracts of land and their environmental footprint can be heavy – such as the leaching that results from the poorly managed application of manufactured fertiliser and the methane from animals. With forestry, poor harvest techniques caused massive problems in my district last summer during our one-in-200-year flood when tree debris dammed waterways. New Zealand potentially has the world’s highest natural resource
wealth per capita and much potential is still in its infancy.
Any business endeavour needs careful management of resources. It’s stupid to mess in your own nest; the challenge is to maximise income while respecting the environment.
The toughest part for the companies investing risk capital to develop projects is working through the unending maze of legal obstacles imposed by bureaucratic process and the spoiler tactics of opponents.
Finally, business decisions involving significant capital are never made with an eye to just the next couple of years of profit – the payback mostly requires much longer time frames. But it can be hard to get investors to understand that.
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