This page provides information on the Climate risks priority theme.
Why climate change is important
Climate change is a top priority for CoFR because it has far-reaching implications for New Zealand’s economy and financial stability.
Climate change and its associated risks provide a direct challenge to the financial system as the risks are significant but extremely difficult to identify, price, allocate and manage with accuracy.
It’s critical CoFR agencies work together to help the financial sector mitigate and prepare for climate change. However, CoFR recognises it is the Government’s role to select overall policy responses to climate change and drive the transition to a low-carbon economy.
The main priority this year is to increase coordination and build capacity and knowledge across our agencies.
Building knowledge and capacity has been identified as a critical step to move the financial sector towards a more sustainable footing. For example, the Financial Markets Authority (FMA) and RBNZ recently collaborated on a training programme to upskill RBNZ supervisors in climate-related risks.
The RBNZ also runs a Climate-Finance Reading Group. It features guest speakers and reviews international literature to ensure CoFR regulators have access to the latest policy advice. Recent presentations have included the Investment Group on Climate Change and the Climate Measurement Standards Initiative. Staff from all CoFR agencies can attend.
The Government has introduced legislation to make climate-related disclosures mandatory for some organisations. The requirement would apply to publicly listed companies and large insurers, banks, non-bank deposit takers and investment managers. The goal of mandatory climate-related disclosures is to:
- ensure that the effects of climate change are routinely considered in business, investment, lending and insurance underwriting decisions;
- help climate reporting entities better demonstrate responsibility and foresight in their consideration of climate issues; and
- lead to more efficient allocation of capital, and help smooth the transition to a more sustainable, low emissions economy.
News and reports
- FMA sets expectations for issuers of ‘green’ and ‘responsible’ investment products (15 December 2020)
- RBNZ and Climate Change
- FMA – our role in an integrated financial system
- Mandatory Climate-related Disclosures (MBIE)
- Mandatory Climate-related disclosures (Ministry for the Environment)
- Climate-related Disclosures Bill (New Zealand Parliament)
- Productivity Commission – Low Emissions Economy report (August 2018)