SYDNEY (Reuters) – New Zealand has become the first country to introduce a law requiring banks, insurers and investment managers to report the impact of climate change on their businesses, Climate Change Minister James Shaw said on Tuesday.
All banks with total assets of more than US $ 1 billion (US $ 703 million), insurers with total assets of more than US $ 1 billion in management and all issuers of equity and debt listed on the country’s stock exchange will be required to make revelations.
“We simply cannot reach net carbon emissions by 2050 unless the financial sector knows what impact their investments have on the climate,” Shaw said in a statement.
“This law will bring climate risk and resilience to the heart of financial and business decision-making.”
The bill, which was introduced in the country’s parliament and is expected to receive its first reading this week, requires financial firms to explain how it would manage climate risks and opportunities.
About 200 of the country’s largest companies and several foreign companies that meet the US $ 1 billion threshold will fall under the law.
The disclosures will be needed for fiscal years beginning next year with the passage of the law, which means the first reports will be made by companies in 2023.
The New Zealand government said in September last year that it would report to the financial sector on climate risks, and those who could not disclose would have to explain their reasons.
The New Zealand government introduced several emission reduction policies during its second term, including promising to make the pubic sector carbon neutral by 2025 and to buy only public transport buses with zero emissions by the middle of this decade.
Prime Minister Jacinda Ardern, who returned to power in October last year with the biggest electoral victory for the center-left Labor Party in half a century, called climate change “the nuclear free time of our generation”.
($ 1 = $ 1.4227 in New Zealand)
Report by Renju Jose in Sydney; Edited by Matthew Lewis