“New Zealand has become the first country to introduce a law that will require banks, insurers and investment managers to report the impacts of climate change on their business.” This was stated by Climate Change Minister James Shaw on April 13th, 2021. The bill constitutes a revolution in the financial world that accelerates the so-called non-financial-disclosure related to environmental and climate impacts.
The law, which is expected to come into force in 2023, will affect all banks with total assets over €600 million, insurers with the same amount of total assets under management, and all issuers of equities and debt securities listed on the country's stock exchange.
How to bring climate risk and resilience to the forefront of the financial world
"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," Shaw explained in a note. "This law will bring climate risks and resilience into the heart of financial and business decision making."
The bill, which has been introduced to New Zealand's parliament and is expected to receive its first reading this week, requires financial companies to outline strategies for managing climate-related risks and opportunities. The rule will affect more than 200 Kiwi companies and several foreign companies reaching the €600m (NZ$1bn) threshold that will fall under the legislation. Companies that will not be able to produce this report will have to explain their reasons.
New Zealand’s policy turns even greener
The New Zealand government, led by the brilliant Prime Minister Jacinda Ardern, introduced several policies to reduce emissions during her second term: among these, a promise to render its public sector zero-emission by 2025 and to purchase only zero-emission public transport buses starting from mid-decade.
Many insiders now hope that this type of legislation, supported by the new European financial taxonomy as well, can be introduced in parliaments across the continent.