A bill has been introduced to New Zealand’s Parliament that will seek to require the financial sector to disclose the impacts of climate change on their business and explain how they will manage climate-related risks and opportunities.
In a statement, the New Zealand government claimed that the Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill is the first of its kind in the world. The bill is set to receive its first reading this week.
If the bill is enacted into law, reporting will be mandatory from 2023 onward for the following entities: all insurers with over $1 billion in assets under management, all banks with total assets exceeding $1 billion, and all equity and debt issuers listed on the NZX.
“We simply cannot get to net-zero carbon emissions by 2050 unless the financial sector knows what impact their investments are having on the climate,” said the minister for climate change, James Shaw. “This law will bring climate risks and resilience into the heart of financial and business decision making.”
Reporting standards will be based on the Task Force on Climate-related Financial Disclosures (TCFD) framework, which is widely acknowledged as international best practice.
“Many businesses face significant physical and transitional risks relating to climate change, and while some businesses have started publishing reports about how climate change may affect their business, strategies and financial position, there is still a long way to go,” said David Clark, minister of commerce & consumer affairs and minister of state-owned enterprises.
The Financial Markets Authority (FMA) will be tasked with overseeing and enforcing compliance to the reporting standards, while the External Reporting Board (XRB) will issue guidance material on environmental, social and governance reporting and other wider aspects of non-financial reporting.