NZ puts banks on climate warning

NEW Zealand has become the first country to introduce a law that requires the financial sector to disclose the impact of climate change on businesses and how they will manage climate-related risks and opportunities.

The move the voluntary approach in Australia, although listed companies must comply with the continuous disclosure regime.

The NZ legislation has been introduced to parliament and will receive its first reading this week. Commerce and Consumer Affairs Minister David Clark (pictured) said it was important that every part of NZ’s economy was helping to cut emissions and transition to a low-carbon future.

“This legislation ensures that financial organisations disclose and ultimately take action against climate-related risks and opportunities,” Dr Clark said. “Becoming the first country in the world to introduce a law like this means we have an opportunity to show real leadership.”

In 2019, the Australian Securities & Investments Commission updated its guidance on climate change-related disclosure, finding in general that its existing, principles-based approach was appropriate.

ASIC, however, highlighted that climate change was a systemic risk that could impact an entity’s financial prospects for future years and might need to be disclosed in a company’s operating and financial review. The regulator also clarified that the risk of directors being found liable for a misleading or deceptive forward-looking statement in an operating and financial review was minimal.

NZ Climate Change Minister James Shaw said the new law will bring climate risks into the heart of financial decision making. “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,” he said. contrasts with