SYDNEY (Reuters) – New Zealand has become the first country to pass a law requiring banks, insurers and investment managers to report the impacts of climate change on their businesses, Climate Change Minister James Shaw said Tuesday.
All banks with total assets in excess of NZ $ 1 billion ($ 703 million), insurers with total assets under management in excess of NZ $ 1 billion, and all equity and debt issuers listed on the country’s stock exchange will provide information.
“We simply cannot achieve net zero carbon emissions by 2050 unless the financial sector knows the impact their investments have on the climate,” Shaw said in a statement.
“This law will put climate risk and resilience at the heart of financial and business decision-making.”
The bill, which has been submitted to the country’s parliament and is expected to be read for the first time this week, requires financial companies to explain how they would manage climate-related risks and opportunities.
About 200 of the country’s largest companies and several foreign companies that meet the NZ $ 1 billion threshold will be covered by the legislation.
Disclosure is required for fiscal years beginning next year once the law is passed, meaning the first disclosures will be made by companies in 2023.
The New Zealand government said last September that it would report to the financial sector on climate risks and those who cannot report it should explain their reasons.
The New Zealand government has put in place several policies to reduce emissions during the second term, including a pledge to make the public sector climate neutral by 2025 and to buy zero-emission public transport buses only from the middle of this decade.
Prime Minister Jacinda Ardern, who returned to power last October and won the biggest election victory for her center-left Labor Party in half a century, called climate change the “nuclear-free moment of our generation.”
($ 1 = 1.4227 New Zealand dollars)
Reporting by Renju Jose in Sydney; Editing by Matthew Lewis