Clock ticking for climate disclosures

Aotearoa is poised to harness corporate New Zealand to meet the demands of climate change mitigation, the fintech sector says.

FintechNZ general manager James Brown says the report of the parliamentary select committee considering the Financial Sector (climate-related disclosures and other matters) Amendment Bill set the stage for making climate-risk reporting compulsory for the financial community in 2023.

The committee’s report went back to parliament today at a time when investment providers are reporting new highs in socially responsible investing, Brown says.

“Listed entities, with a market capitalisation of $60 million or greater, are now the focus of climate reporting. With a new total of 73 percent of listed companies reporting this does mean that New Zealand will still be under the global average of 77 percent,” he says.

“These entities, along with 200 organisations with more than $1billion in assets, including registered banks, licensed insurers and registered managers of investment schemes, will be required to report on how they manage climate-related risks and opportunities.

“The timing of this initiative could not be better for climate change minister James Shaw in the face of the stark realities of the latest United Nations IPCC report that suggests the planet only has 10 years of greenhouse gas emissions, at the current rate, before it hits the 1.5Cdeg scenario.

“It’s apparent that large sections of the community will welcome the progress parliament is making to enable investors to easily identify and track where their investments are being placed.

“Winners will be those companies who can clearly and openly disclose the extent of their commitment to addressing climate change and how they’re progressing toward their targets.”

The responsible investment market in New Zealand is worth $153.5 billion, 52 percent of the estimated $296.3 billion of the total assets under management in 2019.

In the US, Morgan Stanley indicated in 2019 that 85 percent of investors have expressed interest in sustainable investing and half had already taken part in at least one activity.

FintechNZ is about to embark on a project to understand the opportunities around open finance. It is staging an event in Auckland on August 19, with the climate change minister as one of the speakers.

“Greater data sharing will enable these organisations and their investors to easily identify and track where their investment dollars are being held,” Brown says.

“This will create more transparency especially around aspects that will add significantly to the progress we can make as a country toward meeting the nation’s goals in combating climate change.”

The changes introduced by the select committee when considering the legislation would add to the smooth introduction of the new requirements.

“The key is rapid progress in the passage of the legislation through parliament and an early declaration by the External Reporting Board (XRB) of guidelines for corporate and financial institution disclosures,” he says.

Pressure is now on the XRB to set its standards as quickly as possible to start the two-year clock ticking for compulsory disclosures from affected entities.

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