New Zealand is about to set a precedent in the battle against climate change. It is becoming the world’s first country to bring in a law requiring banks, insurers and investment managers to report the impact of climate change on their businesses.
All insurers and banks with over NZ$1 billion in assets will have to make disclosures, with around 200 of New Zealand’s biggest companies and foreign firms being affected. The bill will require financial firms to explain how they would manage any climate-change related risks and opportunities.
The country’s minister for climate change James Shaw said: ‘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.’
Not only will financial firms be forced to assess their own investments with an eye to climate change, but they will also have to evaluate the environmental impact of the companies they are lending money to.
The bill is expected to receive its first reading in Parliament this week, with companies to be reporting on their climate change impact from 2023.
New Zealand policymakers have proved time and again that they intend to set impactful precedents on the environment and climate change to which the rest of the world must watch and follow. The environmental impact of the finance industry is hidden, and more pressure must be put on institutions that fund companies causing environmental destruction. All businesses across sectors must be held accountable to their environmental impact, whether it be direct or indirect.