New Zealand Pushes Banks to Report on Climate Risks from 2023

(Bloomberg) -- New Zealand plans to require financial companies to make climate-related disclosures, putting the nation in the vanguard of such reporting requirements.

Banks, insurers and credit unions are among the financial institutions that would be required to disclose exposure to climate risk as early as 2023, according to the Ministry for the Environment. The mandatory regime would need to be approved by parliament.

Around 200 organizations would be required to disclosure exposure to climate risk, including listed companies and large financial institutions with more than NZ$1 billion ($673 million) in assets under management, the statement said. Disclosures would include descriptions of the board’s oversight of climate-related risks and opportunties as well as processes and targets.

“What gets measured, gets managed -– and if businesses know how climate change will impact them in the future, they can change and adopt low carbon strategies,” James Shaw, New Zealand’s climate change minister, said in a separate statement.

The requirements are designed to promote transparency and incentivize low-emissions investments, which will help New Zealand meet its international obligations and achieve its target of zero carbon emissions by 2050. The Financial Markets Authority would be responsible for monitoring and enforcing the regime.

Globally, companies are facing increased pressure from regulators around climate change. In Europe, the investing industry is facing demands from the European Union to disclose how much their holdings degrade the environment. The U.K. government has proposed plans for the largest pension plans to publish climate disclosures by the end of 2022.

©2020 Bloomberg L.P.