New Zealand has become the first country in the world to introduce legislation that requires financial institutions such as banks, insurers and investment managers to report the impacts of climate change on their business.
All banks with total assets of more than NZ$1 billion ($703 million), insurers with more than NZ$1 billion in total assets under management, and all equity and debt issuers listed on the country’s stock exchange will be required to make these disclosures.
The legislation would mandate financial firms to disclose how climate change impacts their regular business, and explain how they would deal with climate-related risks and opportunities. If the bill is passed, the first disclosure reports would be published by companies as soon as 2023.
The legislation will receive its first reading this week in the parliament. It is expected to impact around 200 organizations, which include the country’s biggest companies and several foreign firms.
“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,” Climate Change Minister James Shaw said in a statement. “This law will bring climate risks and resilience into the heart of financial and business decision making.”
The government of New Zealand has undertaken various initiatives to reduce the country’s emissions and become more sustainable in recent months. For instance, it has pledged to make its public sector carbon neutral by 2025.
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