Crown financial institutions will be expected to report on their exposure to climate risk, the Minister for Climate Change, James Shaw confirmed today.
“The Government’s expectation is that the risks posed by the climate emergency – and the action this Government is taking to address them – become a routine consideration in the investment decisions made by Crown financial institutions. This will lead to a better allocation of public money and support the work this Government is doing to transition Aotearoa New Zealand to a low carbon future.
“It is a step that will be welcomed by most New Zealanders who, I’m sure, want to know that investments being made on their behalf are not harming the planet their children and grandchildren will inherit from them,” James Shaw said.
Last year, Aotearoa New Zealand became the first country in the world to announce its intention to introduce a mandatory requirement on certain large companies and financial organisations to report on climate risks. Legislation to this end is expected to pass before the end of the year.
It was also announced at the time that Crown financial institutions with greater than $1 billion in total assets under management, such as ACC and the NZ Super Fund, would be expected to report on climate risks.
Letters of expectation released today from the Minister of Finance, Grant Robertson to Crown financial institutions give effect to that announcement.
“Following the publication of the independent Climate Change Commission’s final advice in May, the Government will develop an Emissions Reduction Plan to reduce emissions in every part of the economy. This is likely to require a significant shift away from polluting industries and the increased use of clean technologies.
“While this transition could have implications for investments in sectors of the economy that are not compatible with a net-zero carbon Aotearoa, there will also be significant opportunities from investments made in areas focused on reducing emissions.
“By disclosing clear, comparable and consistent information about the impacts of climate change, Crown financial institutions can manage public investments in a way that minimises the risk whilst at the same time maximising the opportunities of this Government’s action to build a low carbon future for Aotearoa New Zealand,” James Shaw said.
The letters of expectation state that Crown financial institution’s climate reporting should be in line with the Task Force on Climate-related Financial Disclosures framework, which is widely acknowledged as international best practice.
“The Government is essentially asking Crown financial institutions to lead by example and demonstrate how accurate and timely reporting of climate risks can contribute to improve investment performance. This builds on the work we are doing to ensure the public sector is carbon neutral by 2025,” James Shaw said.