Chair & Chief Executive report
Chair Jo Brosnahan and Chief Executive Warren Parker. Image – Cissy Pan.
Climate change has been described as the defining issue of the 21st century. Certainly, in the past 12 months New Zealanders have become more aware of the challenges inherent in confronting biological limits to natural resources and of lowering greenhouse gas (GHG) emissions. Finding solutions to these complex, multi–faceted, global problems is at the heart of Landcare Research’s core purpose – to ensure that New Zealanders enjoy a quality of life and economic well–being through the sustainable development, use and protection of land environments. Changed weather patterns, high oil prices, water shortages and loss of critical biodiversity have increased the urgency and national importance of the broad range of research and other activities that Landcare Research is undertaking.
The Government’s comprehensive climate change package announced in September 2007 and administered through MAF was welcomed by our scientists and contributed significantly to their programme of work this year. This has laid the platform for further work over the next three years on greenhouse gas inventory, mitigation technologies and adaptation strategies, life cycle assessment (carbon footprinting), and soil carbon management. It also facilitated a new level of collaboration with other Crown Research Institutes, and in this respect, we are delighted to have helped foster the formation of the NZ Climate Change Centre, to have signed a collaboration agreement with HortResearch to work jointly on achieving sustainable, low residue, carbon neutral horticulture, and to have bolstered our collaboration with Scion, IRL and AgResearch in researching sustainable production and value chains.
Strengthening collaboration is consistent with changes introduced by our major customer, the Foundation for Research, Science and Technology (FRST), towards more negotiated rather than contested processes for allocating research investment. As an organisation, we recognise that much more can be achieved for New Zealand by our scientists working together in internationally competitive teams. We are also placing a high importance on building international linkages with leading research providers who have capability complementary to ours in sustaining land environments, business, environmental technologies and climate change, especially at this stage in Australia and the EU. Looking to New Zealand’s future economy being more tightly linked with Asia and the Near East, we have continued to extend our network of contacts with research–related entities in India and arranged a secondment of a staff member to New Zealand Trade and Enterprise in Singapore. Our ability to form these partnerships reflects the international standing and relevance of our science – in these times of rapid change it is especially important that an appropriate balance is maintained between transitional (applied) and transformational (strategic) research. The latter, which shapes our future, is under pressure as organisations grapple with immediate problems such as those encountered in transitioning to a lower carbon economy.
With sustainability now mainstream in the activities of most research providers and consulting firms, and with greater potential for collaboration than in the past, we have sharpened the focus of our science efforts. During the year we updated our science and technology strategy to concentrate on achieving three nationally significant outcomes: protection and restoration of biodiversity; sustainable land environments; and sustainable business and living. The attainment of these outcomes will require us to address three cross–cutting themes: climate change; the management of weeds, pests and diseases; and Māori futures.
Collectively, the innovation arising from our work in these areas will help New Zealand enhance the management of its natural capital through, for example, market–based instruments for ecosystem services, real–time environmental monitoring technologies, ecoverification tools (such as the carboNZeroCertTM and Enviro–Mark®NZ programmes), scenario planning (such as our Regional Futures programme with Environment Waikato and others), redesigned business processes and changes to consumption behaviour, more effective governance and institutional frameworks for sustainability, and mechanisms for greater community engagement. We recognise faster innovation can be driven by integrating capabilities across our 10 science teams and through high quality customer relationships. To support these, we introduced a personalised leadership development programme this year, with a strong coaching component to build our skill sets in areas such as team work and project management, and we continued to build strategic partnerships with customers.
Our carboNZero programme continued to gain momentum, with a growing portfolio of New Zealand customers. A significant milestone was achieved in signing our first international licensing agreement, with Achilles, a UK–based verification organisation. The carboNZero programme also extended its product range through CEMARS™ (Certified Emissions Measurement and Reduction Scheme) and carboNZero certification for small enterprises. In light of its expansion and requirement for dedicated management and oversight, the carboNZero Strategic Business Unit (separate from our Viresco incubator) was established in March with its own strategic advisory board. This is a precursor to its migration to a subsidiary. In addition to developing substantial new methodology at the forefront of international best practice, the carboNZero team has played an enormously important public good role in technology transfer and community education. With many new players in the marketplace, more incidents of greenwash and increased politicisation of climate change, we have assiduously worked to ensure that all of our offerings are based on the latest international best practice.
Sirtrack, our subsidiary specialising in wildlife tracking, made excellent progress during the year, with 37% sales growth boosting revenue to a record $4.8m. Three innovative new products proved popular, particularly in North America, Australia and Europe. During the year Sirtrack completely reconfigured and modernised its Havelock North premises.
Our pipeline of environmental technologies was further developed. We incubated EcoGene, a new business in DNA diagnostics for the wildlife and conservation sectors, at our Tamaki site. It has exciting potential to draw on our world–leading biodiversity and conservation management science and New Zealand’s strengths in reproductive biology and livestock genetics to service growing local and international markets in conservation medicine and pest management. Its commercialisation and that of other environmental technologies within Landcare Research will be enhanced by Pre–Seed Funding secured for the first time through the Foundation this year.
Our financial performance of $56.2m revenues and an after tax surplus of $632k was a pleasing result after the impact of losing $850k of Foundation funding in the first quarter. More revenue than planned was carried forward because of delays in contracting and access to external services. This was the primary reason for the operating surplus being behind target. In June 2008, we secured $2.5m of Equity Investment Funding to strengthen Sirtrack’s balance sheet and bolster the growth of the carboNZero programme. The net operating cash flow of $4.3m means progress in improving the company’s capital structure was slower than planned.
We are beginning to see benefits from our heavy emphasis on collaboration and building deeper strategic partnerships, and expect this to continue into the new financial year. Our 2008 Customer Survey confirmed that Landcare Research is generally perceived as a high performing, professional science organisation. The survey also highlighted the opportunity to better align our research priorities with the needs of some key customers.
We are delighted that our staff received national and international recognition for their work. David Whitehead and Miko Kirschbaum were recognised by the Intergovernmental Panel on Climate Change (IPCC) for their contribution to the 2007 Nobel Peace Prize, which was awarded jointly to the IPCC and former US Vice President Al Gore. Peter Johnson was selected by the Society of Wetland Scientists as this year’s recipient of their International Fellow Award in recognition of extensive contribution to wetland science throughout his long career.
Looking to the future, we note the scale of NZ Fast Forward and its significance for driving innovation in the pastoral and food industries, including with respect to sustainable production and eco–verification. This should provide substantial opportunities over the next few years for Landcare Research to become established as a partner in these sectors. We are also pleased that initial funding for New Zealand’s science backbone – the national databases and collections (of which we host seven) – was announced in Budget 2008, along with new funding for the Outcome Based Investments (we host three and are a member of a fourth), whose impact and influence is continuing to grow steadily.
We consider that the implications of land–use change in New Zealand, which is rapid by OECD standards, are not sufficiently well understood or planned for. Getting the right balance in using land, especially that with our best soils, to meet immediate pressures such as for urban population growth or to provide renewable energy, and ensuring the best long–term outcome for New Zealanders is not easy. Our science focus on sustainable land environments reflects this large gap in knowledge and need to improve present practice. Land–use choices have profound consequences for biodiversity, GHG emissions and carbon sequestration, land productivity, water yield and quality, landscape aesthetics, infrastructure and energy demand, export earnings and in defining the scope for future land–use options. Accordingly, this year we began to reposition much of our soils and landscape capability around a holistic framework for land use that draws on scenario planning tools to envision and quantify mid–to–long–term consequences of policy, management practices and environmental technologies. We are encouraged by strong end–user and Foundation support for this and are enjoying the benefits of working with our colleagues at NIWA, AgResearch and other research providers in developing a comprehensive science strategy for sustainable land management.
The past 12 months have been demanding of Landcare Research staff. We acknowledge their dedication, leadership and passion to enhance New Zealand land environments and enable sustainable development, and thank them for their enthusiastic support and commitment. No changes to directors were made during the year but in July we welcome Dr Robin Pratt to the Board. We are delighted our immediate past Chairman, Rob Fenwick, was awarded the CMNZ.
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| Signed – Jo Brosnahan | Signed – Warren Parker |