New Zealand becomes first country in the world to require financial sector to report on climate risks

New Zealand has become the first country in the world to require the financial sector to report on climate risks.  

350 Aotearoa was among a majority of submitters that called on the government to introduce mandatory climate-related disclosure during its public consultation period in 2019.

350 Aotearoa Co-Director Erica Finnie said “mandatory disclosure is a good first step to steer businesses and public funds away from unsustainable and risky investments in fossil fuel companies that are most responsible for climate change. It will also grow the social and political landscape for climate advocacy groups and the government to keep pushing our finance sector to cut their ties with coal, oil, and gas companies.”

The government’s announcement sets a regulatory framework by which our financial sector will need to disclose their risks – including investments in coal, oil, and gas companies that are increasingly underperforming based on sector decline and the financial risk of stranded assets.

Over five years, while the S&P 500 Index rose by 48%, the S&P Oil & Gas Index fell by 63% and the Coal Index by 84%.

Finnie said “The financial sector plays a vital role in determining whether we can stop the worst impacts of climate change. The sector is currently keeping the world’s biggest polluters afloat by investing in and lending to coal, oil, and gas companies. Our major banks, asset managers and public funds have the power to accelerate a just transition towards a low-carbon future by stopping the flow of money that enables fossil fuel companies to keep polluting, and instead shift our money towards sustainable solutions that will enable us to mitigate and adapt to climate change.”

“The climate risk disclosure framework will set apart those institutions that have already committed to stop investing in and lending to fossil fuels, from those that continue to gamble with our savings and our ability to limit warming to 1.5°C,” said Finnie.

In July 2020, after years of public pressure from 350 Aotearoa, Kiwibank became the first bank in Aotearoa to commit to a responsible banking policy that rules out coal, oil, and gas companies as business customers. In comparison, the Australian banking groups that own our major banks ASB, ANZ, BNZ, and Westpac have collectively loaned over AUD $35.5 billion to coal, oil and gas companies since 2016. 

“Since 2013, 350 Aotearoa has been coordinating campaigns across Aotearoa, led by grassroots communities, and we have successfully pushed for major institutions including city councils, universities, faith organisations, and banks to divest from fossil fuels. This has been part of the global divestment movement which has shifted over $14 trillion assets under management away from oil, coal, and gas companies. It’s time for the rest of the financial sector to follow suit,” said Finnie.