Other measures implemented by the government as part of its climate plan include a commitment to make the entire public sector carbon neutral by 2025 and to buy only zero-emission buses for public transport in the future. New Zealand has also committed to achieving carbon neutrality by 2050, in line with the Paris Agreement. For more information and your opinion, see Assurance over climate-related disclosures: occupational regulation and expanding the scope of assurance [MBIE website] The recommendations are considered international best practice in climate-related financial reporting and are already being applied on a voluntary basis in New Zealand and other countries. The law will require financial companies to evaluate not only their own investments, but also the companies to which they lend money in terms of environmental impact. The Climate Act achieves this change by amending the Financial Markets Conduct Act 2013, the Financial Reporting Act 2013 and the Public Audit Act 2001 to ensure that the effects of climate change are systematically considered in business, investment, credit and underwriting decisions. Disclosures will be made in accordance with the standards of the New Zealand External Report Board (XRB), which will also be able to issue guidance on a wide range of environmental, social and governance issues that can be applied by companies on a voluntary basis. The New Zealand companies that are required to make disclosures under the Climate Act are: Sally Ho is Green Queen`s resident author and senior journalist. With her passion for the environment, social issues and health, she always keeps abreast of the latest climate stories in Hong Kong and beyond. As a long-time vegan, she also hopes to promote a healthy, plant-based lifestyle in Asia. Sally has a background in politics and international relations through her studies at the London School of Economics and Political Science. Disclosures will be required for fiscal years beginning next year once the legislation is passed, meaning the companies` first reports will be made in 2023.
For the first time in the world, New Zealand will require its banks, insurers and investment managers with total assets in excess of NZ$1 billion (~$703 million) to report the impact of climate change on their operations. Issuers of debt securities and shares listed on the New Zealand Stock Exchange must also provide information. “This legislation will require around 200 of New Zealand`s largest capital market participants to disclose clear, comparable and consistent information about the risks and opportunities that climate change poses to their businesses. In doing so, it will promote business certainty, raise expectations, accelerate progress and create a level playing field,” Commerce and Consumer Secretary David Clark said in a statement after the bill passed third reading on Thursday. “New Zealand is a world leader in this area and the first country in the world to introduce mandatory climate reporting for the financial sector. We have an opportunity to pave the way for other countries to mandate climate-related disclosures,” said James Shaw. It remains to be seen whether the climate-related information required by the Climate Act will have a significant impact on business behaviour in New Zealand and whether more companies will join the voluntary reporting system. The climate bill is currently under review by a special committee of the New Zealand government, which will publish a report on the bill in August 2021 – the bill is expected to be passed after that report. If passed, the Climate Act will represent an important development of the Act and can serve as a guide for things to come in other countries around the world.
While a number of countries are introducing similar laws or regulations, officials said New Zealand`s law is the first to require companies in the financial system to report their climate exposure to investors. In June, the France set new targets requiring investors to declare their assets green and set greenhouse gas emissions targets every five years from 2021 – and was the first major economy to make the rules mandatory. Similar rules are being developed in the UK and are expected to come into force in 2025. The law was first proposed in September 2020, when the government promised to mandate climate risk reporting in the financial sector. About 200 of New Zealand`s largest financial companies, including banks with total assets in excess of NZ$1 billion ($718.90 million), major insurers and issuers of shares and securities listed on the New Zealand Stock Exchange, are required to provide information. read more Registered investment fund managers must provide information by fund. This ensures that investors receive the information they need to understand the impact of climate change on the future performance of their investment. On 12 April 2021, the New Zealand government introduced an omnibus bill in Parliament to introduce mandatory requirements for financial sector companies, disclose the effects of climate change on themselves, and develop strategies to address the risks and opportunities of climate change. The Financial Sector (Climate Disclosure and Other Matters) Bill 2021 is billed by the New Zealand government as the “first” legislation in the world. In the United States, more than 300 companies and investors, including tech giant Apple, on Tuesday called on the Biden administration to set an ambitious climate protection goal. Several foreign companies reaching the NZ$1 billion threshold – including Australia`s four largest banks: Commonwealth Bank of Australia (CBA. AX), Australia and New Zealand Banking Group (ANZ.
AX), Westpac Corp (WBC. AX) and National Australia Bank (NAB. AX) — will also be covered by the legislation. “New Zealand is a world leader in this area and. We have an opportunity to pave the way for other countries to mandate climate-related disclosures,” Climate Change Secretary James Shaw said in a statement. About 200 of the country`s largest companies and several foreign companies reaching the NZ$1 billion threshold will be covered by the legislation. The Financial Sector (Climate Information and Other Matters) Amendment Act 2021 amends the Financial Markets Conduct Act 2013 (FMC), the Financial Reporting Act 2013 and the Public Audit Act 2001. The new law requires about 200 large financial institutions covered by the CMR to start making climate-related disclosures. Affected organizations are expected to publish information from fiscal years beginning in 2023, subject to publication of climate standards by the External Reporting Board (XRB).
New Zealand is the first country in the world to pass legislation requiring financial institutions to disclose climate-related risks and opportunities and, according to the government, to act accordingly. Below the legal threshold of NZ$1 billion, about 200 of the country`s largest companies, as well as several foreign companies, are subject to the new legislation. Once the law is passed, disclosures must be made the following year in 2023. Banks are under increasing pressure to step up their efforts to combat climate change. The country hopes to ensure that the impact of the climate crisis is always factored into business, investment, lending and insurance decisions James Shaw said the legislation was one of many steps the government is taking to meet its 2050 emissions targets under the Climate Change Response Act 2002. So far, New Zealand has performed very poorly in meeting its climate goals. “While some companies have begun publishing reports on how climate change may affect their operations, strategies and financial position, we still have a long way to go,” Clark added. “We simply cannot achieve net-zero CO2 emissions by 2050 if the financial sector does not know the climate impact of its investments,” Shaw said in a statement. New Zealand is the first country in the world to adopt legislation to ensure that financial organisations disclose and ultimately respond to climate-related risks and opportunities, Trade and Consumer Protection Minister David Clark and Climate Change Minister James Shaw announced today. Crown financial institutions with total assets under management of more than $1 billion must also provide climate-related information.
These standards will be based on the Task Force on Climate-related Financial Disclosures (TCFD) and disclosures will become mandatory for fiscal years from 2023. The new rules apply to large insurers, banks, listed companies, listed issuers and investment managers. Currently, most of these large New Zealand companies provide little information about what the climate crisis and global warming might mean for their future operations. By requiring them to disclose this, the law hopes to ensure that the effects of the climate crisis are consistently factored into business, investment, lending and insurance decisions. There is increasing pressure on the banking and financial sector to step up its efforts to combat climate change and take responsibility for its role in creating the crisis. Once the law is passed, companies will have to report on the effects of climate change from 2023. Prime Minister Jacinda Ardern, who returned to power last October and scored her centre-left Labour Party`s biggest election victory in half a century, described climate change as a “nuclear-weapon-free moment of our generation”. Reporting under the new climate reporting standards will be required in the second phase (one year after Royal Approval).