Any bank, credit union, building society, investment scheme, insurer, or Crown Financial Institution with more than $1b in assets will be required to either disclose this risk or explain why it has not.
These 200 or so institutions will cover 90 per cent of the assets controlled in New Zealand, and includes large Crown investors such as ACC and the NZ Super Fund.
Risks could include physical risks from climate change such as extreme weather events or rising sea levels, as well as economic risks such as more stringent regulation of carbon emissions.
Businesses will have to make annual disclosures about the risks, how they are managing them, and how they plan to mitigate climate change impacts.
If they are unable to do this they must explain why.
While other countries are working on similar schemes, New Zealand is the first to introduce one – although entities will not be required to report on climate risk until 2023 at the earliest.
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