(This 14th September story corrects currency to NZ$1 billion ($674.90 million) from $1 billion in paragraphs 6 and 8)
(Reuters) - New Zealand will be the first country in the world to require the financial sector to report on climate risks, its minister for climate change James Shaw said on Tuesday.
Businesses covered by the requirements will have to make annual disclosures covering governance arrangements, risk management and strategies for mitigating any climate change impacts.
Those unable to disclose must explain why, Shaw said in a statement.
“The changes I am announcing today will bring climate risks and resilience into the heart of financial and business decision making. It will ensure the disclosure of climate risk is clear, comprehensive and mainstream,” Shaw said.
New Zealand is in its second week of campaigning ahead of an Oct. 17 general election. Prime Minister Jacinda Ardern’s Labour Party has a strong lead over the conservative National Party on the back of the nation’s COVID-19 response.
In total, around 200 of the country’s biggest organisations will be required to disclose their exposure to climate risk including banks and asset managers with total assets of more than NZ$1 billion ($674.90 million), as well as crown financial institutions such as ACC and the NZ Super Fund.
Overseas incorporated organisations would also be required to disclose in their New Zealand annual reporting.
The NZ$1 billion threshold will make sure about 90% of assets under management in New Zealand are covered by the disclosure system.
“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,” Shaw said.
($1 = 1.4817 New Zealand dollars)
Reporting by Melanie Burton; editing by Jason Neely
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