RBNZ publishes results of financial industry climate disclosure survey

At least 26 financial entities said that they were somewhat vulnerable to rising climate threats

RBNZ publishes results of financial industry climate disclosure survey

Insurance News

By Kenneth Araullo

The Reserve Bank of New Zealand - Te Pūtea Matua (RBNZ) has released a bulletin that presents key insights derived from a survey of prudentially regulated entities about climate change.

The survey specifically targeted regulated entities, such as banks and insurers, requesting that they provide an overview of their advancements in climate-related risk management and their readiness for complying with the mandatory Aotearoa New Zealand Climate Standards disclosure regulations.

This bulletin follows up on an initial industry self-assessment survey on climate-related risk management and disclosure that was conducted in 2019, which proved highly valuable and contributed significantly to the subsequent "Climate Changed 2021 and Beyond" report.

Earlier this year, a second survey took place, focusing on understanding the progress of participating entities in identifying, quantifying, and addressing climate-related risks. It also aimed to gauge their level of preparedness for adhering to the mandatory Aotearoa New Zealand Climate Standards disclosure regulations before the release of the first statements, scheduled for early 2024.

The survey was optional for completion and was distributed to all prudentially regulated entities subject to the disclosure regulations, totalling 41 entities, with the subsequent analysis taken from 29 of them. Key findings from the survey include:

  • Not a single entity claimed to be “not at all” susceptible to climate-related risks if no mitigating measures are implemented
  • Among the responses, 26 entities indicated they were at least “somewhat vulnerable,” while the remaining three expressed uncertainty
  • Entities acknowledged that climate change is already amplifying various business risks, and they anticipate this trend to intensify in the future
  • Nearly all the surveyed entities' governance bodies engage in regular or ad hoc discussions about climate-related risks
  • The influence of concerns about climate-related risks on day-to-day business decisions has increased since the initial survey conducted in 2019
  • Only three out of the 29 entities reported having “fully integrated” distinct aspects of climate-related risk management in a manner comparable to how they manage other business risks
  • Slightly over half of the entities have yet to undertake climate-related scenario analysis, although all of them plan to do so within the next 12 months
  • While no entity assessed itself as “at risk for not meeting” the new disclosure regulations, most entities (25 out of 29) acknowledge the need for “significant further work” as they prepare their initial climate statements

The RBNZ expects the survey findings to play a pivotal role in guiding further efforts within the sector, involving both industry players and regulatory bodies, with regards to effectively managing and disclosing climate-related risks.

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