New Zealand to require financial sector to report on climate risk
In a world first, the New Zealand government has announced that businesses will be required to disclose their impacts on climate change.
Tuesday, September 15th 2020, 4:31PM
by Daniel Smith
New Zealand will be the first country in the world to require the financial sector to report on climate risks, the Minister for Climate Change James Shaw announced today.
“The changes I am announcing today will bring climate risks and resilience into the heart of financial and business decision making. It will ensure the disclosure of climate risk is clear, comprehensive and mainstream,” Shaw said.
The new regime will be on a comply-or-explain basis, based on the Task Force on Climate-related Financial Disclosures (TCFD) framework, which is widely acknowledged as international best practice.
All registered banks, credit unions, building societies, managers of investment schemes and liscenced insurers with assets over 1 billion are required to comply.
Businesses covered by the requirements will have to make annual disclosures, covering governance arrangements, risk management and strategies for mitigating any climate change impacts. If businesses are unable to disclose, they must explain why.
In total, around 200 organisations will be required to disclose their exposure to climate risk. This includes large Crown Financial Institutions, such as ACC and the NZ Super Fund.
“What gets measured, gets managed – and if businesses know how climate change will impact them in the future they can change and adopt low carbon strategies. COVID-19 has highlighted how important it is that we plan for and manage systemic economic shocks – and there is no greater risk than climate change,” James Shaw said.
New Zealand will be the first country to introduce a mandatory climate-related financial disclosure regime.
“I often tell the story of the chief executive who said to me during the passage of our Government’s Zero Carbon Bill that his young daughter had told him one evening that she no longer wanted to have children because of the climate crisis. “What do I say to her?” he asked me.
“Today I am pleased I can say to him that businesses up and down the country will now play their part in making this world cleaner and safer – a world I am sure he is hoping will one day be home to his grandchildren,” James Shaw said.
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