New Zealand has introduced legislation to increase climate transparency in banking. The country’s new policy will require publicly listed companies and large insurers, banks, non-bank deposit takers, and investment managers to make climate-related disclosures.
Most companies and banks currently have no disclosures regarding climate-related investments or potential impacts of climate change on their business operations and model. According to a press release from the government, the new legislation aims to “ensure that the effects of climate change are routinely considered in business, investment, lending, and insurance underwriting decisions.” It also aims to boost investment in sustainable business and renewable energy ventures.
The impacted businesses include all registered banks, credit unions, building societies, investment schemes, and insurers with assets over $1 billion, as well as all equity and debt issuers listed on the NZX.
The disclosures will be structured around four key topics: governance, strategy, risk management, and metrics and targets. International corporations with a presence in New Zealand will be forced to comply with the new regulations as well.
New Zealand has committed to achieving net-zero carbon by 2050. These regulations will encourage financial institutions to move towards a carbon-free future as well as allow customers to make more informed financial investment decisions.