File Photo. Photograph:( Zee News Network )
New Zealand’s Commerce Minister David Clark said that this law makes reporting compulsory for not only banks but also investment firms and insurance companies
New Zealand could make banks reveal their impact on climate change, marking the first such legislation anywhere in the world to make banking sector’s environmental impact transparent.
The legislation forces banks to reveal the impact caused by their investments. New Zealand’s Commerce Minister David Clark said that this law makes reporting compulsory for not only banks but also investment firms and insurance companies.
"Becoming the first country in the world to introduce a law like this means we have an opportunity to show real leadership and pave the way for other countries to make climate-related disclosures mandatory," AFP cited him as saying.
As part of this move, New Zealand is set to compel its financial institutions to report its climate impact in the real world, opening up arrays for the public to judge their climate performance. "It is important that every part of New Zealand's economy is helping us cut emissions and transition to a low-carbon future," he added.
The legislation was introduced on Monday and would make climate reporting compulsory by 2023 if passed.
Clark added that the legislation would ensure financial organisations disclose all their actions corresponding to climate change, while forcing them to take affirmative action against climate change.
New Zealand’s Climate Change Minister James Shaw said that these annual climate reports would undermine high-carbon investments while shedding light on how such investments cannot flourish as the country aims to curb emissions. "We simply cannot get to net-zero carbon emissions by 2050 unless the financial sector knows what impact their investments are having on the climate," Shaw was cited by AFP as saying.
In addition, Shaw hopes that this move would help bring climate risks and ways to fight it into the “heart of financial and business decision making”.
New Zealand’s Prime Minister Jacinda Ardern has committed to becoming carbon neutral by 2050. In addition, the country aims to generate all its energy from renewable sources by 2035.
(With inputs from agencies)