Climate Integration that Serves Client Outcomes

I had the chance to sit in on a fireside chat with Michael Kobori (ex‑Levi’s, Starbucks, Bunge) this week, and it reinforced something I’ve believed for a long time: strip away the politics and climate is just orthodox value creation. Better revenues, lower costs, and lower risk. That’s the language clients understand — and the lens we should use when selecting managers, products, and underlying issuers.

Three simple filters for due diligence

• Incentives aligned to outcomes: I look for companies that embed climate, water, and waste into executive pay and into core business KPIs like cost, margin, and productivity (not just a separate “ESG” slide). If Audit, Risk, and Remuneration committees explicitly own climate/nature, that’s another strong signal of real integration.

• P&L evidence, not promises: Levi’s “Water<Less” reduced factory water by up to ~90% and became a selling point (now more than half their products). Starbucks “Greener Stores” cut energy and water ~30%, improving opex and productivity. If sustainability shows up in cash flows, it’s durable.

• Policy readiness: Extended Producer Responsibility (EPR) for packaging is spreading across US states and could create de facto national standards. Companies already piloting returnable/collectable packaging and tracking deforestation exposure are less likely to surprise us later with capex and margin shocks.

• Lead with value, not ideology: Energy security, waste reduction, and resilient supply chains are risk–return drivers, not political statements.

• Keep the metrics plain-English

• Percentage of capex tested against climate targets

• Emissions intensity trend versus target (assured)

• Percentage of operations certified to “resource‑efficient” standards (e.g., store, plant, or supply chain programs)

• Be candid about timelines: Some initiatives have delayed payoffs. Treat them like any other long-term investment — assess NPV/IRR alongside margin impacts and volatility reduction.

Our national brand in grass‑fed proteins, merino, and pristine tourism already earns a premium. Verified sustainability is how we protect and extend that premium. One Queenstown operator consolidated to a single, high‑utilisation daily sailing - profits improved, culture strengthened, the community was happier, and footprint fell. That’s what operational redesign through a sustainability lens can look like.

At Kernel, we think in risk–return terms first and keep things simple and transparent for you and your clients. That includes clear product disclosures, adviser tools, and an education-first approach in our Learn hub and blogs. You can get a feel for our tone and resources in recent adviser pieces like my round‑ups on the Depositor Compensation Scheme and tax guidance for 2025, both written for adviser use in client conversations: see The Depositor Compensation Scheme: What Advisers Need to Know and 2025 Tax Guidance: What Advisers Need to Know. More about our team and philosophy is here: Our Team, Our Story.

• ESG: Environmental, Social, and Governance (non‑financial factors that affect risk/value)

• EPR: Extended Producer Responsibility (producer pays to collect/recycle packaging)

• GHG: Greenhouse gases (e.g., CO₂, methane) that warm the planet

• KPI: Key Performance Indicator

• SBTi: Science‑Based Targets initiative (aligning company targets with climate science)

Bottom line for advisers: Prefer managers and issuers who convert climate into cash flows, productivity, and risk reduction — and who disclose with the same discipline as financials. That’s the best service we can deliver to client outcomes in NZ right now.