On 1 November 2022, the Ministry of Business, Innovation and Employment (MBIE) shared its long-term insights briefing, The future of business for Aotearoa New Zealand: An exploration of two trends including productivity and wellbeing – purpose-led business and use of blockchain technology (the Briefing).
The Briefing and insights are a culmination of research and engagement with business owners, industry leaders, academics, community members, government officials, youth, and the public over 2021 and 2022.
The Briefing explores opportunities and implications for the productivity and wellbeing of New Zealanders as a result of global trends like climate change, technology change and demographic change. MBIE considers government may have a role “to help ensure the future outcomes that businesses and New Zealanders more broadly want to achieve, are aligned”.
MBIE’s Briefing has been submitted for consideration by the Select Committee and the Select Committee report will likely be published between March to May 2023.
Summary of the Briefing
MBIE’s exploration of the two trends – purpose-led businesses (“committed to achieving wider outcomes than just profit”) and blockchain (“a type of database, with data stored in chains that cannot normally be deleted or changed”) – found that new forms of business that are values-oriented, networked, open, and peer-to-peer/decentralised will grow and evolve, but traditional business forms will also still persist.
We summarise the insights around the trends below, and focus later on the blockchain technology chapter.
Trend 1: Purpose-led businesses
- The number of purpose-led businesses will continue to grow steadily, even though many businesses will continue to focus on profit. This trend is likely to benefit overall productivity and wellbeing.
- This reflects a history of social responsibility among New Zealand businesses led by community-focused small businesses and Māori businesses which tend to take an intergenerational view.
- Growth will be driven by increasing pressure from employees, investors and consumers (particularly young people) for businesses to be more socially and environmentally responsible.
- There may be erosion of support for businesses which are not seen as purpose-led, or which make false claims to gain market position.
- Common low-cost, simple and accessible tools for measuring and demonstrating successful purpose-led outcomes is key.
- The growth of purpose-led business may lead to a broader range of business models, as the roles of business, government and community become more intertwined.
Trend 2: Blockchain
- Use of blockchain is growing in the finance sector and in supply chains to support secure transactions, traceability and digital identity. Its uses are much broader than Bitcoin and other cryptocurrencies.
- Over the next 10 years, blockchain will probably become more embedded as a technology in business and across systems in Aotearoa New Zealand. Its role will be as a technology option as part of a broader set of decentralised and distributed ledger technologies (DLT) and a new web3 generation of the internet.
- Blockchain is enabling peer-to-peer and networked business models, such as decentralised autonomous organisations (DAOs).
- Uses of blockchain include growing ‘for good’ applications that address social and environmental challenges, and use by Māori businesses.
- Blockchain has benefits and challenges for productivity and wellbeing. Governance and regulation will need to address risks and opportunities in an integrated, adaptive and socially connected way.
Further insights on uses of blockchain technology
What is happening now?
Blockchain has seen a range of uses and market activity over the past decade.
MBIE notes the following as current themes in New Zealand:
- Emergence of smart contracts enabling decentralised applications – Smart contracts are currently being used in supply chains and in the finance sector. Smart contracts also form the basis of non-fungible tokens (NFTs) which are being used in different roles. For example, Rhythm and Vines music festival uses collectible NFTs to support authenticated access to event experiences, and Voxels virtual world uses NFTs in its metaverse platform.
- DAOs can enable more networked approaches to governance – DAOs are being used in decentralised finance, for investment, charitable fundraising, NFT purchase, and to offer services of members such as training. DAOs can also extend its capabilities to allow more participatory network governance and operations, moving away from notions of centralised decision making, though this is complex.
- Hypes, risks and challenges are driving the need for quality governance – While blockchain aims to support secure data and digital trust, there are pre-existing risks because of its complexity. For example, incorrect or fraudulent data can still be saved to a blockchain, and bad actors can still use the blockchain to sometimes hack or scam vulnerable people. These challenges and opportunities are driving countries to develop governance approaches for blockchain applications. Just across the ditch, Australia released a National Blockchain Roadmap in 2020 which focuses on regulatory systems, standards, skills and investment and is moving toward legal recognition of DAOs.
- Use of blockchain in New Zealand – Awareness of blockchain and its use is growing. In New Zealand it is mainly being used by entrepreneurs and early-adopter businesses in the technology and creative sectors. Table 7 of the Briefing sets out some examples of blockchain / DLT use in New Zealand in supply chains and logistics, energy, finance, digital assets, banking, voting, and health.
- Governance of blockchain use in New Zealand is at the early stages – New Zealand’s approach is in its early stages. At the moment, regulators such as the Financial Markets Authority and Department of Internal Affairs cover those who use blockchain and related technologies in financial services or products, and as virtual asset service providers. MBIE also notes that New Zealand’s Council of Financial Regulators are actively considering if existing regulatory regimes are fit-for-purpose.
What could happen in the future?
Based on current patterns, MBIE has identified some key trends for blockchain in New Zealand (which we summarise below):
- Blockchain becomes more embedded in business and systems – MBIE anticipates the use of blockchain to grow in the long term, both in at an individual business level and in broader systems such as across industries or economies. Blockchain may serve several functions in technology-enabled systems including supporting security and transparency. An example of a technology-enabled system is decentralised digital identifiers.
- DAOs are a growing part of the business landscape – DAOs are more likely to become more common and integrated with current business operations, but also as a stand-alone business form. MBIE expects more experimentation in and use of DAOs if settings in New Zealand change to enable legal registration of DAOs.
- Blockchain ‘for good’ to help tackle big challenges – MBIE expects that more initiatives in New Zealand will develop ‘for good’ uses of blockchain / DLT to enable the scaling of community and business action.
- Blockchain by Māori, for Māori, with Māori – MBIE expects increasing growth and success of decentralised, blockchain/DLT initiatives for iwi-owned or Māori businesses. For example, through the ownership of data consistent with Māori needs and interests, and potentially to support the security and provenance of supply chains.
The Briefing rightly recognises that we need to think differently about emerging technologies in the role of business and government in improving the productivity and wellbeing of New Zealanders.
In particular, the blockchain section of the Briefing has great insights into the current state of the industry in New Zealand and a bit of a crystal ball gazing into the future – recognising the great potential of this technology for New Zealand and purpose-led business models.
The Briefing highlights examples of businesses converging the two trends successfully, including to enable DAOs that support inclusive governance, support supply chain transparency, and to hold and use data on financial, social and environmental dimensions for investment or consumer decisions.
We have seen and worked on this this first hand. It is also great seeing mentions for some of our clients as examples, including Trust Alliance New Zealand Incorporated, Centrality, CentraPass, and others we’ve worked with such as The Wellbeing Protocol.
If you have any questions in relation to the Briefing or how it may affect your business, or are interested in setting up a blockchain-based ventures in New Zealand, please contact one of our experts.
This article was co-authored by Shaanil Senarath-Dassanayake, a solicitor in our Financial Services team.
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