NZ becomes first in world for climate reporting
Commerce and Consumer Affairs Minister David Clark says Aotearoa New Zealand has become the first country in the world to introduce a law that requires the financial sector to disclose the impacts of climate change on their business and explain how they will manage climate-related risks and opportunities.
The Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill has been introduced to Parliament.
“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,
“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,” said David Clark.
The Bill will make climate-related disclosures mandatory for around 200 organisations, including most listed issuers, large registered banks, licensed insurers and managers of investment schemes.
Once passed, disclosures will be required for financial years commencing in 2022, meaning that the first disclosures will be made in 2023.
Reporting will be based on the Task Force on Climate-related Financial Disclosures (TCFD) framework, which is widely acknowledged as international best practice.
There are four main elements to the Bill:
- It introduces mandatory climate-related disclosures for most listed issuers, along with large registered banks, licensed insurers and registered managers of investment schemes.
- It requires the disclosures to be made in accordance with climate standards that will be issued by the External Reporting Board, or XRB.
- The Financial Markets Authority will be responsible for the independent monitoring and enforcement of the relevant reporting entities’ compliance with the new reporting standards.
- The XRB will be able to issue guidance material on environmental, social and governance reporting and other wider aspects of non-financial reporting.