Environment

In a first, New Zealand introduces climate change laws for financial firms

New Zealand has introduced a new climate change law which is hailed worldwide as a very unique move towards mitigating the effects of Climate change.

The Climate change law introduced by New Zealand will require banks, insurers, & investment managers to report the impacts of climate change on their business.

What could have ousted this unique move?

The term Climate Change has almost gotten synonymous with achieving the target of keeping the global temperature below 2°Celcius. That sure is the most critical aspect of mitigating the global issue.

However, there is much more to it than just this. The Paris Agreement in December 2015, enshrined three goals to strengthen the global response against climate change:

  • Adaptation for addressing & reducing vulnerability to climate change,
  • Mitigation for reducing emissions to limit the global temperature increase to well below 2°C up to 1.5°C,
  • Making financial flows consistent with climate goals.

Often looked upon and neglected, this could have prompted the Minister of Climate Change James Shaw to introduce this law.

Rationale behind:

The rationale behind the introduction of this law as the Minister of Climate Change James Shaw in a statement mentioned is: “We cannot simply get to net-zero carbon emissions by 2050 unless the financial sector knows what impact their investments are having on the climate.”

This law is projected to bring the risks and resilience related to climate change to the heart of financial and business decision-making, thus making a significant impact.

Provisions:

  • The law that has been introduced in the parliament will require financial institutions to report the risks & opportunities related to climate and how they would be managed.
  • All of the country’s biggest companies, around 200 of them that meet the NZ$1 billion thresholds will fall under this legislation.
  • Once the law is passed, disclosures will be required for the next financial year.
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