New Zealand becomes the first country to mandate financial sector disclosure to address climate change Global Social Buzz

By Eric

2021.10.23

ESG (environmental, social and corporate governance) is a new global trend, with many countries and major corporations actively promoting ESG development. New Zealand has become the first country in the world to introduce legislation to make it mandatory for financial institutions to disclose climate change-related risks and opportunities in order to strengthen their response to the climate change crisis.

Most financial institutions in New Zealand currently provide very little information on how their businesses will respond to climate change risks and opportunities. New Zealand legislation requiring disclosure by banks, large insurance companies, New Zealand-listed equity and debt issuers with total assets of more than NZ$1 billion will be made mandatory from the financial year 2023.

It is understood that the New Zealand government wants the legislation to ensure that businesses will always consider the impact of the climate crisis in their business, investment, lending and insurance underwriting decisions.

New Zealand’s Climate Change Minister, James Shaw, said that New Zealand was a global leader in tackling the climate issue and had become the first country in the world to introduce mandatory climate related notification requirements for the financial sector, paving the way for other countries to introduce similar measures.

The New Zealand government has revealed that around 200 large financial institutions in New Zealand will be required to disclose this information when the measures come into force. The legislation is considered to be effective in improving business certainty and creating a level playing field.

According to data from the New Zealand Climate Change Commission, New Zealand’s greenhouse gas emissions increased by 57% between the 1990s and 2018, which is lower than Turkey’s growth rate among all industrialised countries. New Zealand’s greenhouse gas emissions are reported to have increased by 2% between 2018 and 2019.

The New Zealand government has introduced a number of emissions reduction policies, including a commitment to make the public sector carbon neutral by 2025 and to buy only zero-emission public buses.