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New Zealand finance companies will be forced to report on climate change risk, climate change minister James Shaw announced.
The policy will force some 200 large financial organizations in New Zealand to disclose how exposed their businesses and investments are to risk related to climate change.
Any Crown bank, credit union, mortgage company, investment plan, insurer or financial institution with more than $ 1 billion in assets will be required to disclose this risk or explain why it has not.
These roughly 200 institutions will cover 90 percent of controlled assets in New Zealand and include large crown investors such as ACC and the NZ Super Fund.
Charlie Higgison
New Zealand financial institutions will be forced to report on risks related to climate change, the government announced.
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Risks could include physical risks from climate change, such as extreme weather events or sea level rise, as well as economic risks, such as stricter regulation of carbon emissions.
Companies will need to make annual disclosures about risks, how they are managing them, and how they plan to mitigate the impacts of climate change.
If they cannot do this, they must explain why.
While other countries are working on similar schemes, New Zealand is the first to introduce one, although entities will not be required to report climate risk until 2023 at the earliest.
“What gets measured, gets managed, and if companies know how climate change will affect them in the future, they can switch and adopt low-carbon strategies,” Shaw said.
“Covid-19 has highlighted how important it is to plan and manage systemic economic crises, and there is no greater risk than climate change.
“Today many large New Zealand companies have a poor understanding of how climate change will affect what they do. The changes I’m announcing today will bring climate risks and resilience to the heart of financial and business decision-making. It will ensure that climate risk disclosure is clear, complete and widespread. “
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The Financial Markets Authority will be responsible for the independent monitoring of the reports.
Nobel Prize-winning economist Joseph Stiglitz congratulated New Zealand for introducing the scheme.
“Once again, New Zealand leads the world,” Stiglitz said, in a video included with Shaw’s press release.
In a statement, the Australasia Association for Responsible Investment welcomed the announcement.
“This marks an important step forward and demonstrates New Zealand’s exemplary leadership on the global issue of climate change and the sustainability of New Zealand’s financial system and economy,” said RIAA Chief Simon O’Connor.
“New Zealand’s future resilience and prosperity depends on being able to weather the risk of climate change.”
