New Zealand financial firms must report and act on climate change in world first
New Zealand became the first country in the world to impose mandatory climate reporting for its financial sector, a move according to experts that will ensure that the adverse effects of climate change are regularly seen in businesses and ultimately help accelerate business cases. emission reductions.
The new law will apply to nearly 200 of New Zealand’s largest insurers, banks, listed companies and investment managers.
Large foreign banks, including the four central banks in neighboring Australia, will also be affected.
Trade and Consumer Affairs Minister David Clark said the law was a step forward in securing a green future for New Zealand.
“It’s important that every part of New Zealand’s economy helps us reduce emissions,” Clark said in April when the legislation was first introduced, before being adopted on October 21. “Financial services and markets play an important role in New Zealand’s transition to a clean, green and carbon neutral future.”
New Zealand’s parliament yesterday passed mandatory climate risk disclosure for large listed companies and financial institutions.
Looks like the US Treasury is about to follow suit. https://t.co/BsrjBL9BDA
– James Shaw (@jamespeshaw) 22 October 2021
As a rule, most financial institutions do not disclose to the outside the impact of their investments on the environment.
By making it mandatory to disclose information on “the risks and opportunities that climate change presents to their business,” Climate Change Minister James Shaw said. entities will be pushed to be more sustainable by “taking into account the short, medium and long term effects of climate change” in their business decisions.
The first disclosures are expected to be made in 2023.
The world’s first climate reporting legislation is part of New Zealand’s comprehensive climate policy, alongside demands for the public sector to be carbon neutral by 2025 and the entire nation to stay below 1.5 degrees of global warming above pre-industrial levels.
New Zealand also has its goal of net zero emissions by 2050 enriched in law.
While the new legislation has been well received, activists say the nation is still not doing enough. Methane from agriculture and waste, which accounts for more than 40% of New Zealand’s emissions, is excluded from zero emission target, leading research group Climate action monitoring assess the nation âvery insufficientâ climate policy.
Similar climate-related information for financial institutions can be found in Switzerland, France and United Kingdom.