New Zealand has taken a significant step as the first nation globally to legislate the necessity for the financial sector to disclose the impact of climate change on their operations. This law mandates organizations to address and manage climate-related risks and opportunities effectively.
The Financial Sector (Climate-related Disclosure and Other Matters) amendment bill will enforce mandatory climate disclosures for approximately 200 entities, including most publicly listed companies, large registered banks, licensed insurers, and investment scheme managers. This initiative will encompass all registered firms boasting total assets exceeding $1 billion, capturing about 90% of New Zealand’s assets under management within the disclosure framework.
Presented this week, the bill, once enacted, will require disclosures for financial years starting in 2022. Climate Change Minister James Shaw emphasized that “mandating climate impact disclosures within the financial sector will enable businesses to recognize high-emission activities that threaten their future viability, while also identifying opportunities associated with climate action and new low-carbon technologies.”
In a related development, the UK government recently released a consultation paper advocating for compulsory climate-related financial disclosures from publicly traded companies, significant private firms, and limited liability partnerships (LLPs).