New Zealand has become the first country globally to pass laws requiring banks, insurers and investment managers to disclose the impact of climate change on their companies.
According to Carrier Management, around 200 of the country’s largest financial companies – including banks with total assets over NZ$1bn ($718m), large insurers and equity and debt issuers listed on New Zealand’s stock exchange – will be required to make disclosures.
Alongside native companies, foreign businesses who also meet the NZ$1bn threshold will also come under the new legislation.
The new laws introduced by New Zealand will also mandate financial organisations to explain how they would manage climate-related risks and opportunities.
The disclosure requirements will be based on standards from the country’s independent accounting organisation the External Reporting Board, with these standards being based on the Task Force on Climate-related Financial Disclosures. The disclosures will become mandatory at the beginning of the 2023 financial year.
New Zealand Minister for Climate Change James Shaw said, “New Zealand is a world-leader in this area and we have an opportunity to pave the way for other countries to make climate-related disclosures mandatory.”
Other countries who are introducing climate-related disclosures include Japan, which recently stated it intends to make climate disclosures mandatory for large Japanese companies from April next year. Also in Asia, the Hong Kong Monetary Authority underlined earlier this year that it is planning to speed up proposals to require financial organisations to disclose their climate change-related financial risks.
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