New Zealand Prepares Bank Bill So That Insurance Companies Must Report On Impacts Of Climate Change

Illustration of Auckland, New Zealand. (Wikimedia Commons/Craig)

JAKARTA - New Zealand became the first country to introduce a bill requiring banks, insurance companies, and investment managers to report on the impact of climate change on their businesses, Climate Change Minister James Shaw said on Tuesday.

All banks with total assets of more than 1 billion New Zealand dollars or approximately USD 703 million, insurance companies with total assets managed more than 1 billion New Zealand dollars and all equity issuers and debts listed on the country's stock exchange must make disclosures.

"We cannot achieve net-zero carbon emissions by 2050 unless the financial sector knows what impact their investment will have on the climate", Shaw said in a statement, according to Reuters.

"This legislation will bring climate risk and resilience into the core of financial and business decision-making", he said.

The bill, which has been introduced to the New Zealand Parliament and is expected to receive its first reading this week, requires financial firms to explain how they will manage climate-related risks and opportunities.

About 200 of the country's largest companies and some foreign companies that meet New Zealand's $1 billion thresholds will be regulated under the law.

Disclosure will be required for financial statements starting next year once the law is passed, meaning the first report will be made by the company in 2023.

The New Zealand government last September said it would make a financial sector report on climate risks. Those who cannot disclose should explain the obvious reasons.

In addition, to lower emissions levels, Prime Minister Jacinda Ardern's second-term government pledged to make its public sector carbon neutral by 2025 and only buy zero-emission public transport buses from the middle of the decade.