In a milestone law, 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, said minister for climate change James Shaw.
“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 said in a statement.
“This law will bring climate risks and resilience into the heart of financial and business decision making.”
According to New Zealand’s Commerce Minister David Clark, getting the opportunity of being the first nation to introduce such law allows them to lead the way forward for the world, “Becoming the first country in the world to introduce a law like this means we have an opportunity to show real leadership and pave the way for other countries to make climate-related disclosures mandatory.”
With the climate reporting being open, investors would get to see how the company they plan on putting their money into, impacts the environment.
According to Clark, this would also make financial institutions rethink their decisions, as well as consider real-world impact caused by their investments on the environment while also allowing the common public to see this impact from afar.
Clark added, “It is important that every part of New Zealand’s economy is helping us 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.”
The legislation that was first introduced on Monday, if passed successfully, would make it compulsory for financial institutions to report climate impact by 2023. The bill, which has been introduced to New Zealand’s parliament and is expected to receive its first reading this week, requires financial firms to explain how they would manage climate-related risks and opportunities.
The New Zealand government has introduced several policies to lower emissions during its second term including promising to make its public sector carbon-neutral by 2025 and buy only zero-emissions public transport buses from the middle of this decade.
