Z Fuel is a fuel distributor with branded service stations. It comprises some of the former assets of Shell New Zealand and Chevron New Zealand. It is based in New Zealand and its Chief Executive Officer is Michael Bennett and had revenue of $4.570 bn in 2018, which makes it a huge part of New Zealand’s economy. Their decision to be environmentally sustainable has affected their decision making.
Z Energy’s stance on sustainability is clear. They stand for “an environmentally sustainable New Zealand that is an example to the rest of the world” and an “inspiration to kiwis” and be “part of the solution not the problem”. Their dedication and commitment to be environmentally sustainable will affect their financial and non-financial decisions in the future and could affect how their company is run.
As a fuel distributor, the majority of sales and expenses are spent on crude oil which is then refined to be used in different vehicles or be used as lubricants. As fuel is a major part of the environment and a major contributor to climate change, any decisions made on what type of fuel or how fuel is used by Z Energy will affect their goal of being environmentally sustainable and ultimately their profits and sales (since they specialise in selling fuel). Fuel represents 2,579 Mn of their expenses so it’s very reasonable to say that any decision on their fuel can affect their company. Their goal to be environmentally sustainable will no doubt earn them supporters who are concerned about New Zealand’s future.
Z Energy doesn’t drill or explore oil, so they import/purchase from international markets. When importing, Z Energy decides which grade of oil they want. For their goal, they start to purchase the crude oil with the least amount of sulfur contents which is a big contributor to climate change. The oil they import is then sold commercially to local and international companies and customers who then use it and the type of oil used will eventually affect the environment, so what Z Energy sells will determine the amount of emissions. Purchasing crude oil that has low sulfur contents is more expensive because it burns cleaner and clearer. Z Energy’s commitment to environmental sustainability has caused them to import the better quality of crude oil which decreases the amount of greenhouse gases. This could count for the increase of “Excise and carbon expenses” which were 1,011 Mn in 2018 compared to the previous year which was 941 Mn. This could also count for their reduction of carbon emissions by 30%. The overall impact of being environmentally sustainable affected what type of fuel they bought, which is that they have to buy another grade of fuel which is then a little bit more expensive so there might be increase of “Purchases of crude and product” expenses but more efficient just to match their goal of being environmentally sustainable, but this gained them supporters who are caring for the future of their living place. They also plan to introduce their “Z Bio D” biofuel which would be used for transport; Z Energy has distribution expenses of 56Mn as of financial year 2018. Biofuel would lower the distribution costs in addition of matching their sustainability goal.
Environmental sustainability also affected Z Energy’s decision making when it comes to selling single use plastic bags. Selling plastic bags is harmful to the environment, as it takes thousands of years for the decomposition of plastics. Z Energy has seen it as their duty to eliminate single use plastic bags as part of their environmental sustainability goal. As of 1st of June 2018, single use bags weren’t handed to customers. This saved Z Energy’s landfill to waste ration (which is the amount of waste dumped) and the number of recyclable plastics which went up to 1,250 tonnes in 2018 from 923 tonnes in 2017 which is an improvement, the more recyclable plastics the better, unrecyclable (can’t be renewed) is worse. Again, their commitment to environmental sustainability impacted their decision on whether to provide single use plastic bags.
The compostable coffee cups also were a result of their dedication to their sustainability campaign. Z Energy sells 4.5 million coffee cups annually so decisions on what type of coffee cups or how they’re presented could potentially affect sales. Compostable coffee cups, or “Z Espress coffee cups”, also was part of Z’s decision to reduce waste and be environmentally sustainable and waste-free. The addition of compostable coffee cups and BYO Coffee cup where you can bring your own cup was a positive change and earned it even more supporters, this may well lead to an increase in sales in the future as most customers are drawn in to the fact that Z’s coffee cups are not doing harm to the environment and the fact they can use their own cups in addition to the environmental benefit whether or not the customers don’t buy the coffee cups. This could count for the increase of compostable and organics which increased to 470 tonnes in financial year 2018 from 442 from the previous financial year. The overall consequence of this is increased reputation of being environmentally responsible and could potentially and most likely increases their sales because people are happy knowing that Z coffee cups have no environmental dangers. Also again, this means that their dedication to their sustainability goal has caused them to take action or decision on coffee (which is also a good part of their revenue since they sell 4.5 million cups annually).
Another environmental and also social (because it involves the business impacts on people) sustainability, is Z’s Supplier Code of Conduct, which sets out guidelines for suppliers of Z Energy. This includes and covers matters that affect the ethics and health, safety and environment of employees working for Z Energy suppliers. These matters include guidelines from the United Nations where there are a set of expectations for the employers. The social aspect of this is the health, ethics and safety of suppliers’ employees. Z Energy has made it very clear that they’d not purchase or deal with suppliers if the following are present in the suppliers environment: gender inequality, little or no human rights, discrimination, physical or mental abuse, harassment, no equal opportunities, global labour standards, workers being of legal age to work, minimum wage, overtime and maximum hours, no health and safety obligations for workers. For the environmental aspect of the sustainability is that the suppliers are required to waste and use less and engage in ways that does not affect the environment. All this is part of the Z Energy supplier code of conduct, and any infringements and non-compliance will result in Z Energy taking action. This influences the decisions made by Z Energy because suppliers, who are not paying their workers and don’t follow health and safety and regulations and all the social and environmental guides that Z requires, are usually cheaper suppliers (also known as sweatshops) as they don’t have to pay most of their expenses, the fact that Z Energy has a supplier code of conduct that has requirements that will most likely incur additional expense costs because Z Energy will buy from suppliers who then sell with an additional cost because they have to cover expenses (like wages etc.) compared to suppliers who don’t meet the requirements. So not only the cost is considered ( even if its significantly cheaper than other suppliers) but also Z Energy will ask the company if they meet ALL the supplier code of conduct requirements so that they ensure their sustainability goals are met. The impact of this is again, support from customers and potentially more sales as more people are willing to support companies with this type of behaviour who respect human rights and is a role model for all other companies. This could count for the increase in customer satisfaction for Z Energy, of 88% in 2018 compared to the previous year of 87% or 81% to Caltex which was part of Chevron and continues to be independently owned and operated. Their goal of environmental and social (“Our stand on health and safety has seen us achieve the international OHSAS 18001 standard.”) sustainability has affected their decision on making purchases with suppliers with respect to their requirements from their code of conduct
Overall, the conclusion is that it’s that Z Energy’s goal of environmental (and social) sustainability will have a very significant effect on the future of Z Energy and their decisions and will it will still have a lasting effect on the company and how things are run until Z drops their goal of standing for “an environmentally sustainable New Zealand that’s an example to the rest of the world and an inspiration to kiwis” and finally leading the way to a “low carbon future”. In addition to the future of our environment which is going to be saved or at least prolonged due to such practices among companies which contribute majorly to climate, Z Energy will have monetary advantage as more people are drawn in to the fact they care about their environment and their goal is to sustain it. This will help Z Energy of earning a reputation as it continues to get involved and support the “green” revolution. Z Energy also recently stated they support the complete phase-out of plastic bags in New Zealand, and they continue to be a company role model for leading other companies in climate change action.