350 Aotearoa applauds the passing of the Climate-related Disclosures Bill by parliament in its third reading in Parliament today. Mandatory climate-related risk disclosure is a useful mechanism to ensure extensive and thorough climate-risk reporting in our financial sector. Executive Director of 350 Aotearoa, Alva Feldmeier says “Mandatory disclosure is a good first step to steer businesses away from unsustainable and risky fossil fuel investments, and ensuring disclosures are consistent with climate change commitments and projections.”
Up until now, there have been no required reporting standards for financial institutions to assess their climate-related risks. In fact, the lack of cohesion has meant that our major banks like ANZ and Westpac claim to be carbon-neutral while loaning billions of dollars to coal, oil, and gas companies each year. Under this new climate-risk reporting framework, businesses will need to provide more information on their portfolios and the climate-related risks.
350 Aotearoa is disappointed that in the final version of the Bill, only “knowing failure” to comply with climate standards is regarded as an offence (461ZC). “We would have liked to see a change to include “negligent failure”. The financial sector has a moral responsibility to ensure extensive and thorough climate-risk reporting. The climate crisis has reached a point of critical urgency. Negligence can no longer be an excuse”, says Alva Feldmeier.
Secondly, the focus of the legislation is on the climate reporting entity (and associated investors and stakeholders) identifying risks and opportunities. There is no mention of the role of the legislation to promote accountability and to encourage the raising of standards to result in a shift away from emissions-intensive activities. “Transparency must be coupled with accountability and concrete change from business to lower emissions and curb global heating below 1.5 degrees aligning with the Paris Agreement.”
Climate-risk disclosure is a necessary but insufficient tool at this point to manage climate-related risks, build a climate-resilient economy, and meaningfully reduce gross emissions to achieve the targets set out in the Paris Climate Agreement and the Climate Change Response (Zero Carbon) Amendment Act. 350 Aotearoa is supportive of the legislation and acknowledges that this is one small but important step in the global race to a fossil-free future.