New Zealand ESG newsletter - November 2024

Apology for abuse in care

Prime Minister Christopher Luxon apologised on 12 November 2024 to the estimated 200,000 (at least) New Zealanders who have been victims of abuse while in state care and faith-based institutions. The apology follows the Royal Commission of Inquiry into Abuse in Care’s final report, Whanaketia – ‘Through pain and trauma, from darkness to light’. In his apology, the Prime Minister indicated that work had begun or has been completed on 28 of the 138 recommendations the report made. Luxon stated a national remembrance day would be held next year on 12 November 2025, and that work to remove street names and public honours of proven perpetrators would be undertaken.

The Responding to Abuse in Care Legislation Amendment Bill also had its first reading on 12 November. The Bill proposes to:

• Repeal the ability of staff in youth justice facilities to undertake strip searches, and clarify the length of time for secure care prior to judicial oversight;
• Enhance restrictions on those who can work with young children, including preventing those who have convictions for overseas offences equivalent to specified New Zealand offences;
• Change the definition of vulnerable adult to include disability; and
• Strengthen record keeping oversight and obligations on agencies.

The Bill is now open for submissions until 11:59pm on Wednesday 11 December 2024

Patronscan privacy

Nightclubs across New Zealand and Australia frequently require patrons to scan their IDs using software like Patronscan to enter. This software captures personal information: ID details and photographs, verifies the age of the patron and allows venues to flag patrons who pose a risk. However, the privacy implications of collecting such personal information, particularly late at night when individuals may not fully understand or consent to it, remain largely unexplored and perhaps insufficiently considered.

Patronscan collects and holds patron data for up to 30 days. It also allows venues to flag unruly patrons for longer for antisocial behaviour such as violence, destruction of property, theft, or sexual assault. Collecting patron data helps to keep venues safe and identify troublemakers before they can cause further harm. However, the Privacy Act 2020 places a number of obligations on venues collecting this type of personal information:

• Personal information cannot be collected unless it is necessary for a lawful purpose in connection with a function or activity of the business.
• Information must not be retained for longer than is required for the purposes for which the information may lawfully be used.
• The venue must also take reasonable steps in the circumstances to ensure the individual is aware the information is being collected, the purpose of the collection, and the patron’s rights to access the information.

It is unclear whether venues comply with these requirements, for instance by adequately advising patrons about the extent of the information collected and their rights in relation to it. Even if patrons were advised, where individuals are under the influence of alcohol they may not be, in the circumstances, reasonably aware that their personal information is being collected nor the purposes for which their information is being collected. Without transparency in how the flagging system is used, venue staff may flag patrons without good cause. While the benefits of the software cannot be ignored, the widespread use of patron scanning at bars may warrant further scrutiny.

If you’d like to read more about potential concerns regarding the use of personal information, you can view our article on Patronscan privacy from the Litigation and Corporate Commercial team.

New Zealand reversing its genetic modification ban

The Government has announced that New Zealand’s nearly 30-year ban on genetic modification and GMOs will be lifted. The Government aims to pass legislation to govern the use of this technology and establish a dedicated regulator by the end of 2025. This announcement will have significant impacts for the scientific, healthcare, agriculture, horticulture and other primary industries in New Zealand. It signals a more permissive approach to genetic modification and the opportunity for fresh analysis of the benefits and risks of this technology.

In New Zealand, gene technology and GMOs are commonly discussed in the context of plant and food products, but the actual applications are much broader and include scientific research, the development of disease resistant plants and animals, the development of medicines and vaccines, and gene therapies to treat cancer and genetic diseases in humans.

Gene technology and the release of GMOs into the environment is currently heavily restricted under law. The primary controls for the use of gene technology and GMOs are in the Hazardous Substances and New Organisms Act 1996 (HSNO Act) which preclude GMOs from being imported, manufactured, developed, field tested or released into the environment other than in accordance with an approval issued by the Environmental Protection Authority (EPA).

The Government is proposing to pass legislation modelled on Australia’s Gene Technology Act 2000, and to appoint a dedicated regulator to oversee applications to use gene technology. This regulator will be a new business unit within the EPA, supported by a technical advisory committee and a Māori advisory committee. Applications will be assessed under a risk-based tier system with certain technologies and organisms entirely exempt from regulation. Any overlap with other regulatory processes will be streamlined. The Government also proposed to expressly remove any ability councils may have to restrict the use of GMOs under the RMA.

The Government intends to introduce a bill by the end of 2024, with legislation and a regulator to be in place by the end of 2025. The actual timeframe is likely to depend on the response to this bill by Parliament, industry stakeholders, and the wider public – our view is that there is the potential for a heated debate, and we would treat any indicative timeframes with caution.

New copyright law – will the joke be on us?

The Government is considering a proposal to change New Zealand copyright law by adding parody and satire as a defence to infringement.

This change would give people greater freedom to critique and parody copyright works. The move could empower creators and critics, but also create challenges for businesses, especially if it facilitates the spread of misinformation. More freedom is likely to be welcomed by some sectors of the creative industry; on the flip side, such freedom could make it easier for consumers to criticise businesses, including on ESG issues like social justice and greenwashing.

 Currently, there is no guidance on what will amount to fair use of a copyright work for the purpose of parody or satire. Key issues could include:

• The risk of going ‘viral’: With the mainstream adoption of generative AI and the widespread reach of social media, it has never been easier for content to go viral. The Copyright Act is a useful tool for removing infringing content from the internet and social media. but takedowns may be harder to access if copycat content is misleading but fits within the parody or satire exception. In such cases, businesses may lose a valuable remedy for protecting their IP and reputation.
• Spread of misinformation: If a broad exception for parody and satire comes into play, the practice of parodying all manner of political content and advocacy advertising may be acceptable when it would have previously involved copyright infringement. A new exception for parody and satire might even facilitate the spread of deep fake content, albeit this is already difficult to prevent, and criminal provisions may be needed to stem the spread of dangerous misinformation.
• Moral rights: These rights protect authors from derogatory treatment of their copyright works, even if they no longer own the copyright. However, businesses can’t own moral rights, so it will usually be up to the author to step in. It will be interesting to see whether moral rights trump an exception for parody and satire in a case where ‘taking the mickey’ is derogatory to a copyright work. There are also implications for copyright works that incorporate Māori words, designs and taonga. One person’s joke might be deeply offensive to another person’s cultural identity and beliefs.

Given the prevalence of ESG considerations in public and investor scrutiny, businesses should continue to ensure their ESG efforts are genuine and transparent. They should be aware of the increased risks of consumer criticism especially when information (and misinformation) can spread at lightning speed.

The Bill is still in its early stages and may yet be shelved pending a broader review of the Copyright Act 1994 (see: MBIE Review), so watch this space.

Personal grievances post-pandemic: Insights from Marsh v Jetstar Airways Limited

The COVID-19 pandemic and ensuing lockdown hit New Zealand over four years ago, but there has been an ongoing run of cases about the lockdowns and mandates which affected workplaces. Any employee who raises a personal grievance has three years to lodge a claim in the Employment Relations Authority. Grievances about vaccine mandates are likely to be nearing the end of this time limit. But for those employers who have not yet settled such complaints, Marsh v Jetstar Airways Limited serves up a warning.

In Marsh v Jetstar Airways Limited, an ex-Jetstar pilot was awarded NZ$20,000 in compensation after having his employment terminated for refusing to comply with the COVID-19 vaccine mandate. Mr. Marsh refused to get the Pfizer vaccine as required under the COVID-19 Public Health Response (Air Border) Order 2021. He requested to remain employed and go on leave without pay until a different vaccine was available. Jetstar declined and dismissed him.

After analysing Jetstar’s process and decision, the Authority found:

• Jetstar had not fairly considered Mr. Marsh’s leave without pay request, amounting to an unjustified disadvantage.
• Jetstar failed to ensure that all reasonable alternatives to termination had been explored before dismissing Mr. Marsh, amounting to an unjustified dismissal.

The case highlights that employers will be required to uphold good faith obligations and undertake fair processes, even in the unprecedented and unusual circumstances of a pandemic.

As a related point, for those employers who inserted special clauses relating to vaccinations or pandemics in their employment agreements, now may be the time to revisit whether they remain necessary and appropriate.

Pursuing directors personally for unpaid company debts

Last year’s Supreme Court decision in the Mainzeal litigation has opened up the possibility of creditors making direct claims against company directors for losses they have suffered as a result of directors breaching their duties. A recent case, Boaden v Mahoney, is an example of a creditor obtaining judgment against a director. Whether the creditor gets paid is, of course, a different issue. In this article, we consider the Boaden case, and what creditors should be thinking about if they are considering bringing a claim against a director.  We expect that the Law Commission will also consider this issue next year, especially in the context of claims by liquidators and equal treatment of ordinary unsecured creditors.

COP29 and NDC

The two week long United Nations Climate Change Conference (COP29) wrapped up on 24 November 2024 after running 2 days past scheduled. The conference took place in Baku, Azerbaijan and was made up of delegates from nearly 200 countries with the focus on climate financing.

An agreement was reached between the parties to triple the annual finance target from $100 billion to $300 billion USD ($171 to $514 billion NZD). The final agreement also includes a goal of raising $1.3 trillion USD ($2.23 trillion NZD) in climate financing annually by 2035. This financing is to assist developing countries in turning away from fossil fuels and towards renewable energy.

The final agreement, however, was not reached happily. The delegates for many countries, including the representatives for especially vulnerable Pacific islands, walked out of the conference mid-negotiations. These nations did not feel their requests for larger sums of money to help adapt to devastating weather events and transition to clean energy were being heard.

Overall, it seems no nation walked away from the conference fully satisfied. The work still to be done is significant. This has been acknowledged by UN Climate Change Executive Secretary Simon Steill who, among positive remarks, closed the conference saying “this is no time for victory laps, we need to set our sights and redouble our efforts on the road to Belém”. COP30 will be held in Belém, Brazil in November 2025.

Under the Paris Agreement, New Zealand sets its own Nationally Determined Contribution (NDC) which indicate our contribution to the global effort to counter climate change. From the period of 2021-30, New Zealand’s target is a 50% reduction of net emissions below gross 2005 levels. The Government is now looking towards our second Nationally Determined Contribution for the period of 2031-35. A report from the Climate Change Commission found that New Zealand could contribute emission reductions of up to 69%. However, for this target to be achievable, action must be taken before 2031 across key sectors. Public consultation on the second NDC is open until 8 December 2024 here.

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This is our last edition for 2024, we will see you in the new year. Happy holidays!

This newsletter contains contributions from: Emilie Aitkin, Ana Coculescu, Kavinna Dhepyasuwan, Samantha Fowler, May Hodgkinson James McMillan, Tayla Gordon O’Meara, Ashleigh Ooi, Nadia Ormiston, Harriet Phillips, Josh Pierson, Melissa Tahere and Jori Whitfield-Topp.

For further information on ESG, please visit our ESG: Global Solutions Hub where you can find updates from many jurisdictions, including New Zealand or reach out to Partner Nicky McIndoe.