Tuesday, 21 April 2020

SUBJECT: BUSINESS AS USUAL IS GONE | A RESILIENT BUSINESS MODEL NEEDED

E nga Rangatira Minita, tena hoki koutou,

There will be pressure on you each by mainstream business advocates like Business NZ for a rapid return to BAU. COVID19 has highlighted the fragility and unsustainability of this prevailing business model. 

This is both a short sighted and fraught strategy (policy) for our nation, whanau and mokopuna!

COVID19 has affirmed that businesses operating with collectively owned assets like Maori have lower leverage ratios than their industry counterparts. Lower leverage brings greater resilience to economic shocks and longer-term sustainability. This has cushioned Maori businesses and whanau from the worst impacts of COVID19.

This means, in the longer-term, Maori businesses with collectively owned assets can and are having a stabilising effect on the New Zealand economy as a whole through these troubled COVID19 times and importantly as New Zealand lays out a new and more resilient pathway in the weeks, months and indeed years ahead.

Responsible and Ethical Investment

Over recent years Te Ao Maori (the Maori world view) has been turning up in more and more traditionally Pākeha places such as The Reserve Bank, the Primary Sector Council’s vision and strategy document and elsewhere. And, domestically aligning to the Governments strategy to transition to a low emissions economy and parallel move to placing wellbeing at the heart of government policy-making.

The International context

It is important to position Te Ao Maori and its values-based business model in an international context. Over the past 40 years, global business has centred on shareholder primacy – a commercial ideology that focuses on investors and shareholder returns to the exclusion of all other stakeholders. In practical business terms, this single bottom line perspective requires business to attend to the interests of shareholders to the exclusion of all other participants. We see this position embedded in the NZX and FMA Corporate Governance Principles.

Maori business has never ascribed to this model, and has consistently practiced a sophisticated stakeholder framework. 

In recent years, international governance developments have been revisiting shareholder primacy, and there is now a well-developed recognition of stakeholder primacy. This is evident in EU Directives, in the 2020 Davos statement of corporate purpose, and in the August 2019 USA Business Roundtable reframing of corporate purpose.

This is as follows:

“The (USA) Business Roundtable new Statement on the Purpose of a Corporation signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.”

These developments signal a new conceptualisation of BAU. Added to this is the parallel development of investor expectations. Globally, the investment community has been increasingly active in demanding wider accountabilities for businesses. This focus of investor expectations centres on socially responsible investment. Kiwi Saver funds and the NZ Superannuation Fund are increasing their involvement in this values-led model.

We have seen in recent months the massive investment funds like the US Blackrock Investments with $12 trillion under investment systematically steering away from unsustainable fossil fuel investment. Towards socially responsible investing (ESG) or, ethical investing, which seeks to consider both financial return and social/environmental good to bring about social change.

This is shaping and reshaping the trajectory of long term global capital flows around the world.

Lessons from our past – Partnership

The late Ngati Porou leader and scholar Ta Apirana Ngata, wrote of Mātauranga Māori and Mātauranga Pākeha and the great benefit of:

"casting our nets between them"
(rather than fishing in one or the other)

Proposed Resilient and Sustainable Maori (New Zealand) Business Model

A guiding premise of this paper is that BAU is gone! Government will be under enormous pressure to resort to BAU by the proponents of BAU like Business NZ and others. 

These groups simply cannot promote (even if they wanted to and will likely argue that they can) any different and more resilient model because the underlying philosophy of BAU is entirely in conflict with the direction of travel of the world and model set out here below:

Resilience (where the circles intercept) Aotearoa Business Model

This paper strongly promotes this more resilient model is advanced directly with Government through the immediate establishment of Government – Maori Business PEAK Group in Partnership to lead and implement such a model.

Waves (phasing) of ACTION is needed (implementation)

We will need to be crystal clear about how to design, resource and implement a recovery, that will be non-linear (not straight lines and linear). We must collapse and destroy bureaucracy and fiefdoms of people who say things like ‘sorry my mandate does not allow us to do this’ – where I say, change the law, remove these voices and let’s pull together.

This will be a marathon and not a sprint!

Phases of over-lapping waves (implementation) 

The time for decisive leadership is now!

In the words of the late Dr. Apirana Tuahae Mahuika:

“Nōku te whenua, kei a au te korero”
“Nōku te whenua, ko au te rangatira”
(E hara mo etahi atu hai tu korero mo tatou)

“The land is mine, I will speak for my land”
“The land is mine, I am the rangatira”
(It is not for anyone else to speak for Maori)

The evidence is clear where global institutions are moving in the same direction towards a more sustainable mainstream business model embedding ESG. COVID19 has highlighted the fragilities and failings of BAU with the fallout we are witnessing around us today.

Furthermore, the $NZ50 Billion Maori economy stands testament that through prudent management of low debt (whai rawa), collectivity (whanaungatanga), sustainability (kaitikaitanga), intergenerational horizons have seen the maori economy grow at a compound annual growth rate of 5 to 10 times that of BAU!

The ideas and thinkings laid out in this paper represent the kind of leadership that builds on New Zealand’s global leadership response to COVID19 and extends this as the kind of leadership required out into the next century to assure a safe and prosperous future of our collective whanau and mokopuna!

Finally, I want to commend you each and collectively for your leadership with Prime Minister Jacinda Ardern for the way in which you have navigated New Zealand through these extremely difficult times for our whanau and nation. Your efforts are noted and have made a real difference for our whanau at home.

We are in unprecedented times Minister (s) requiring extraordinary thought leadership where as a Nation we contemplate today possible moves from Level 4 to Level 3 in the next few days. 

Te Taumata encourages you to give serious consideration to the thoughts and ideas in this paper and stands ready to discuss with you anything here and provide more detail as required.

Kia ora and kia kaha tatou!

Chris Karamea Insley
Tiamana
Te Taumata
Phone +64 21 972 782
Website: www.tetaumata.com