Kashish Jain
New Zealand has become the first country to introduce a climate change law for financial firms in the world. The Country has become the very first to introduce a law that will require banks, insurers, and investment managers to report the impacts climate change made on their business. This was informed by Minister James Shaw.
Such disclosures will be made by all banks with total assets worth more than NZ $1 Billion ($ 703) and insurers with more than NZ $1 Billion in total assets under management. All equity and debt issuers will have to make such disclosures as well.
Minister James Shaw has said in his statement,
“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,”
“This law will bring climate risks and resilience into the heart of financial and business decision making.”
This bill, which has been admitted in the Parliament, is expected to receive its first reading within a week. This bill will hold firms accountable for the damage they are causing to the environment. It requires such firms to explain how they will manage these climate-related risks and mitigate the damage.
Around 200 of the country’s biggest companies and several foreign firms that meet the NZ$1 billion thresholds will find themselves affected under the legislation.
Once this law is passed, disclosures will be required for financial years beginning next year. This means that the first reports made by the companies will be in 2023.
Previously, the New Zealand Government introduced several policies that would lower the emissions during its second term. These include promising to make its public sector carbon neutral and purchase zero-emissions public transport buses from the middle of this decade.
Prime Minister Jacinda Arden has called climate change a “nuclear-free movement of our generation.”