Chair & Chief Executives Report
Jo Brosnahan and Richard Gordon
It is a pleasure for us to introduce Landcare Research’s Annual Report for 2010/11. The year has brought challenges, including the terrible earthquakes and aftershocks that have occurred in Christchurch, close to our headquarters at Lincoln where half of our 400 staff are based. But the year has also brought opportunities from the reform of the government–owned Crown Research Institutes (CRIs), of which we are one of eight. This Annual Report for 2010/11 complements our Statement of Corporate Intent 2011–16, available on our website, which sets out our goals and strategic initiatives for the next five years.
In spite of the disruptions, we achieved favourable financial outcomes for the year. Our return on equity was 8.4% (target 7%); the full–year earnings before interest and tax (EBIT) for the Parent were $3.248m (target $2.888m) and for the Group (including our subsidiary, Sirtrack) were $2.928m (target $3.048m). Science and business revenue grew by 3% and cost savings across the Parent contributed to these positive results. The solid performance gave us confidence to invest earnings in additional science capacity and facilities, including new greenhouse gas research laboratories and equipment. We are proud that these results were achieved in an environment in which the earthquakes caused around 1500 lost staff–working– days while staff attended to damage at home and in their communities. We are grateful to our clients and science partners who accommodated our need to modify contract dates.
Canterbury’s ongoing earthquakes and the major events in Japan and South America remind us that society is ultimately at the mercy of nature. Where we can, we have to nurture this relationship by seeing the environment as an asset, not merely a resource. The earthquakes also elicited a strong social response – what we call manaaki tangata, caring for the people – which reminds us of the importance of social capital and the need to nurture those relationships. Landcare Research stands at the interface of the environment, society and the economy, seeking to understand the complex relationships and finding ways in which those can be nurtured to achieve sustainable prosperity.
The Government’s CRI reform was the first significant review since the CRIs were set up in 1992. A major output, the Statements of Core Purpose, has given each CRI a greater clarity of outcomes and connections. Landcare Research is now clearly accountable for contributing towards four national outcomes, working especially with government, industry and Māori organisations, for being the leader amongst CRIs in certain areas of science, and for collaborating with other science providers in other areas.
The reform has encouraged us to adopt collaborations in which we will align our resources with those of science users (government, industry, Māori organisations) to achieve national outcomes. This has been facilitated by the award of core funding from the Ministry of Science and Innovation (MSI) to CRIs, giving Landcare Research discretion over the allocation of 40% of our total revenue (up from 10% in previous years). The balance of 60% remains subject to our clients’ contestable processes. We are fortunate in having had experience of significant collaborations through the Outcome–Based Investments (OBIs) in the biodiversity and biosecurity areas. Those OBIs are now being reformed to align with the new model, but using similar principles of resource alignment between stakeholders.
We have made significant contributions to national outcomes during the year. Working with the Department of Conservation (DOC) and regional councils, we have contributed to development of a regional biodiversity monitoring framework. This will be an important tool as government implements a national biodiversity strategy. Contributing to sustainable land use, we have made many of our soils and land data readily available through web portals (page 31) to help land managers make better decisions about land use. We have also developed new methods for improving water–use efficiency and reducing contaminant losses to groundwater. In the area of greenhouse gases and carbon, our work has contributed to a better assessment of changes in soil carbon stocks through soil erosion and respiration; while in the area of sustainability (development within limits) we have conducted the first water footprint assessment for kiwifruit and trialled new ways to engage society and science in debating complex issues – in this case the redevelopment of Christchurch.
Relevance and excellence are essential components of the contribution our science makes in achieving national outcomes. Science excellence is measured by our peers in the global science community who assess the value of our contribution to knowledge through our publications being accepted in highly ranked science journals. It is pleasing that an independent global survey by Thomson Reuters ranked Landcare Research 1st amongst environmental research institutes and universities in New Zealand based on science publication numbers and impact during the decade 2001 to 2011. This result reflects the quality of our scientists and of our national and international science collaborations. This interaction is the lifeblood of our capability building and keeps us at the forefront of global science.
Growing science excellence and capability depends on strong international connections. In many of our areas of science (e.g. greenhouse gas science), there is heavy competition for science talent globally. By strengthening our international linkages, we keep our science at the global leading edge and make Landcare Research better known and attractive as a New Zealand employer. Increasingly we will be seeking international science revenue through our global partners. During 2010/11, we have strengthened our scientific relationships in China and the Americas, and our science and business revenue in Australia, Europe and the Americas.
One of Landcare Research’s strengths is its multidisciplinary make–up and ability to integrate not only across science areas but also across the economic, environmental, social and cultural dimensions of contemporary issues. We also integrate across spatial scales from paddock to region to national and global, and across time frames from prehuman history in New Zealand to the future. Our fourth national outcome is the integrator, in which we develop projects and solutions that combine those different dimensions for the benefit of private and public organisations who face increasingly complex, multi–faceted challenges. An example is the development of economic pest control methods that minimise environmental impact and meet social and cultural requirements. Vision Mātauranga attempts to realise the potential of Māori through innovation and using traditional knowledge. Our byline – manaaki whenua, manaaki tangata – reflects the connection between the environment and the people. The Māori worldview sees all life as inextricably connected with the environment. During the year, we have invested in bringing these approaches together in the context of conservation management. We have led groups to meet First Nations people in Canada and Australia to share experiences of such management, and to recognise the complementary strengths of the contrasting approaches. We also have worked with Māori groups to help them convey their holistic viewpoints in resource management planning processes; and we have developed the Māori land–use visualisation web–tool based on a partnership with Te Puni Kōkiri and the Ministry of Justice. This web–tool is designed to help realise the economic potential of Māori–owned land through making its features and capabilities better understood.
The CRI reform recognised the need for CRIs to contribute to economic growth through innovation. We have a number of areas of technological development for some of which we will be seeking private–sector development partners. We also await development of national models for supporting technology transfer.
Our business unit, carboNZeroCertTM, certifies greenhouse gas emissions, management and offsetting for organisations. In 2010/11 it grew its net revenue by 29% across five countries, and passed the milestones of 500 certifications, over 230,000 tonnes of carbon dioxide offsets, and 44 million tonnes of emissions under certified management. On 1 July 2011 the operations of carboNZero were transferred to a separate company, wholly owned by Landcare Research, with Graham Carter as the new CEO.
Our business unit Ecogene® provides DNA diagnostic services especially for wildlife. Its business has grown impressively during the year, contributing amongst other diverse projects to identification of the PSA disease affecting kiwifruit during 2011. Our Sirtrack and Invasive Species International businesses have suffered difficult export conditions but held up well in spite of those.
Twelve years ago, we put ourselves on a ‘sustainability journey’, publishing a report of our sustainable development that set a benchmark for our performance against social, economic and environmental goals and measures. Our sustainability performance is documented on these web pages. Our operations are carbon neutral through continued efforts to reduce our footprint and the purchase of offsets, which puts a price on carbon in our financial accounts. We invest in greener building and facility design, and waste and water reduction. We also invest in social capital, developing our staff, keeping them safe, assisting our communities, and in 2010, started the sponsorship of a First Foundation scholar in his last year of school and throughout his undergraduate years.
Our greater sustainability challenge, as we recognised in our first sustainable development report in 2000, is to work with our partners to achieve sustainable prosperity in New Zealand. Our staff are passionate about making a difference through their science. As we enter a new financial year, we see the institutional settings that will help us achieve that goal. However, we recognise that the lingering impacts of the economic crisis will put pressure on science spending in both public and private sectors.
We wish to thank our partners in government, industry, science and the wider community who give us their support. We thank our own people whose dedication and professionalism underpin our value to society as an organisation.
We acknowledge and thank Dr Warren Parker, our CEO until 21 February 2011, who led the organisation since 2005. He is now CEO of Scion Research, bringing his skills to science for the forest industry. We also farewell and thank Graeme Boyd, who has been a director with Landcare Research for the past six years.
We especially thank our 200 staff at Lincoln who have endured three major earthquakes and over 8000 aftershocks since September 2010. Some have lost their homes and/or friends, and many have suffered damage to property and livelihoods. We will continue to support them and also use our science to support the recovery efforts for the Canterbury community. In particular, we welcome efforts to rebuild the city using low impact urban design principles and to bring science organisations closer together in finding sustainable and integrated solutions for agriculture, business and the environment in the Canterbury Region.
In a recent global survey, Thomson Reuters assessed the scientific publication record of organisations conducting environmental research over the period 2001–11. The ranking, assessing the impact of science papers through the number of times they are cited by other scientists, put us 1st in New Zealand and 3rd in Australia and New Zealand combined. Landcare Research was placed 37th in the world, after Australia’s Macquarie University (14th) and James Cook University (35th). Chicago University was placed 1st and Oxford University 36th .
Jo Brosnahan, Chair
Dr Richard Gordon, Chief Executive