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Comments on “The future of business for Aotearoa New Zealand”

Comments on “The future of business for Aotearoa New Zealand”, produced by MBIE in May 2022. Accessible here.

Response by Steven Moe, Partner at Parry Field Lawyers and host of Seeds Podcast www.theseeds.nz.

I am a lawyer working daily in the area of purpose driven business with clients across the country. I had an interview at the end of last year with your team on this topic and am happy to have a follow up conversation if it helps. I support both for purpose and for profit entities ranging from companies to charities and the full mix in between including hybrid approaches. I also host Seeds Podcast www.theseeds.nz with currently 307 conversations with purpose driven entrepreneurs mainly about what drives them and motivates them to advance purpose led business.

Here are a few additional thoughts for your consideration:

  • If possible I suggest splitting your report into two so that both topics have maximum impact as they deserve their own reports.
  • The fundamental answer is: Yes. Business should be encouraged to have positive impact and businesses that explicitly state their mission and report on it should receive greater encouragement.
  • 100 years from now people will read your report and hopefully be looking at it from a framing where every business at that time is required to be having positive impact as part of the key reason for it existing. The report has the chance to sit on the “right side of history” by advocating for change to enable this to happen.
  • The report needs to not just talk about the shift that is going on it should also talk about how the Government potentially could encourage and catalyse a greater acceleration of purpose for companies.
  • In the same way that Covid has accelerated work from home by about a decade or more, so the NZ government could accelerate purpose driven companies it if fostered an ecosystem where they were actively encouraged and supported in real ways.
  • Specifically, the Government could be world leading by introducing a new class of company (“Impact Companies”) which would become a template for the rest of the World to follow.
  • If a company meets the criteria then it would also receive some tax concessions as a result of the positive impact it was having, and could prove.
  • This would mean NZ looks at other places like the UK and their ‘Community Interest Company’ Structure and social benefit company structures in North America.
  • Have discussed all this extensively recently in “Laying Foundations for Reimagining Business: Essays” so will not repeat it all here – see: https://theseeds.nz/laying-foundations-for-reimagining-business-essays/
  • I don’t think you touch enough on the fact that many are choosing to have hybrid approaches – Charities are setting up companies. Companies are setting up charities. This is because there is no adequate legal vehicle at present which sits in between both and is purpose driven. I can explain more if this trend interests.
  • There also needs to be capital to fund this area – Impact Investing is growing, and I think the paper could expand on that more. There needs to be funding for these initiatives. I wrote an overview here with the CSI: https://www.centreforsocialimpact.org.nz/knowledge-base/overview-of-impact-investing-in-aotearoa
  • As an example, a company called Community Finance (I am the Chair so know about it in detail) has raised $93 million in the last two years – for what? To build social housing by connecting investors with the social housing need that can be met by community housing providers. It is facilitating impact investing and is the largest private fund so far to do so www.communityfinance.co.nz
  • I think you should have a separate section about Te Ao Māori and the different approach which this encourages – it is the true superpower and what would be distinctive in Aotearoa New Zealand. It is touched on briefly but could be expanded.
  • The paper mentions many overseas authors and commentators. Am not sure why more of the New Zealand thinking is not included. Am just asking as in the Resources section as there seems to be more emphasis on what is written overseas?
  • As another example, the work of the Ākina Foundation has been very influential in this area and I think they deserve a small box outlining what they have done, such as the gathering of 1,600 people in Christchurch in 2017 for the Social Enterprise World Forum?
  • Responding to the specific questions:

Question 2: Do you think that there will be a steady increase in purpose-led businesses? Are there other possible future states you think we should note?
Yes, I think so. At some point your question will be academic and looked on by future generations with a smile as by then all business will have shifted so that those who do not do good are ostracised and will no longer be viable as consumers vote with their wallets and regulations force business to report on their impact – this is starting with climate change reporting but will not stop there (it will take many decades though).

Question 3: Are there other opportunities or risks that could arise from a steady growth in purpose-led businesses?
The opportunity is for business – which has caused many of the problems we face today due to short sighted profit focus – to actually contribute to fixing those issues. Companies which do this will be preferred over companies which do not.

Question 4: Do you think that there is a greater role for business in contribute to wider societal outcomes? If so, what do you think business needs to be able to do this?
Yes. A regulatory system which encourages businesses to enshrine their impact. If they do, they get greater standing and financial incentives via tax concessions. Companies are not required to have a constitution and they should be, and the constitution should include a section about their mission and have them report on it.

Question 5: Do you think there is a role for government in enabling purpose-ld business? What role should or could government play?
Yes. See earlier points that Government should be looking at how it can create an ecosystem where purpose driven businesses are encouraged to thrive because they ultimately often help to solve problems in society as well. Move away from the conception of a binary of “do good = charity with tax concessions”, in opposition to “make profit = business that is taxed”. There will over time be a blurring here as the problems are so great we need to incentivise business to step up and help – those companies which enshrine their mission and purpose, report on it and actively make a difference should be incentivised as we need more and more of those. It’s not that complicated – other countries do it and we have the chance to jump over their examples to introduce a world leading approach which will set the course for the future. Government could also create a fund like the NZ Green Investment Finance Fund that exists now – so set up more in other areas.

Thanks for the chance to participate in this. All the best and I hope the report gets some discussion going and leads to some actual change too.

Yours sincerely,
Steven Moe
6 June 2022

Note: if you want to make a submission it closes on 24 June here: Draft Long-term Insights Briefing on the future of business for Aotearoa New Zealand | Ministry of Business, Innovation & Employment (mbie.govt.nz)

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