Home In the News New Zealand Introducing World’s First Climate Legislation For Finance Firms

New Zealand Introducing World’s First Climate Legislation For Finance Firms

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New Zealand is a country with almost 5 million inhabitants dispersed across a geographic mass about the same size as the UK. This translates to a lot of green open space. In recent years, it has been gaining recognition for its business acumen. Local companies are gaining ground in the global marketplace, and New Zealanders are also occupying C-level positions at major international companies.

A more detailed examination of the NZ business environment shows that the country:

  • Ranks second in the world when it comes to ease of doing business
  • Ranks fourth in appeal to foreign investors
  • Has a straightforward tax system that excludes payroll taxes, social security, and capital gains taxes
  • Has open market conditions with low inflation rates and pro-competitive legislation which provide stability and efficiency
  • Has an affordable but highly skilled workforce
  • Has a strong export economy
  • Is known for being a culture that’s open to experimenting and innovation.

Now New Zealand is about to become the first country to introduce legislation requiring banks, insurers, and investment managers to assess and report on the environmental impact of their investments. The country aims to achieve carbon neutrality by 2050 and believes the financial industry must play its part.

According to minister for climate change James Shaw, New Zealand cannot fulfil this goal of net-zero carbon emissions by 2050 unless the financial sector recognizes the impact its investments has on the climate.

The legislation will integrate environmental risks into financial and business decision-making.

All banks with total assets exceeding NZ$1 billion, insurers managing assets exceeding NZ$1 billion and all equity and debt issuers listed on the New Zealand stock exchange will be required to submit disclosures. This includes 200 of the country’s largest companies.

Investing in nature

During an IMF and World Bank meeting, Prince William stated that protecting nature is only one part of the fight against global warming and that investing in reforestation and sustainable agriculture were “cost-effective” strategies for addressing the issue.

Prince William has developed a reputation for being an outspoken supporter for environmental causes and has even organized a competition with the goal of motivating people to try to solve some of our current environmental challenges. The Earthshot Prize will honour ideas and technologies that have the potential to protect the planet with five £1 million prizes.

This year, the IMF and World Bank spring meetings were held online and focused on building a sustainable economy following the COVID-19 pandemic.

As of late, there have been growing pressures on banks to take a more active role in fighting climate change. Following demands from a consortium of investment firms, HSBC announced that it would cease to finance coal projects in the EU by 2030 and in all other markets by 2040.

Similarly, Barclays shareholders are expected to propose a resolution at the bank’s forthcoming annual general meeting urging the bank to phase out financing for coal, oil, and gas companies.

In the United States, more than 300 companies and investors are calling on the Biden administration to establish a similarly bold climate-change objective that wants to reduce US greenhouse gas emissions by at least half compared to 2005 levels.

Small businesses also have an important role to play in protecting the environment

Despite the fact that small businesses are facing financial strain and uncertainty as a result of the pandemic, many are making progress in terms of environmental implications.

Companies and individuals alike have had to deal with a lot of roadblocks affecting their financial security and quality of life, but the move to remote work has given us an opportunity to slow down and examine our daily habits more closely, which allowed us to see how wasteful modern society has become.

People from all around the world switched from office-based jobs to working remotely from home, so those that used to be stuck in front of their computers even during their lunch breaks now had the time to take a walk around their neighbourhoods and notice their surroundings. According to sales statistics, many took up gardening as a result.

Understanding how companies can contribute to environmental efforts is extremely important in light of growing global concerns over natural resource depletion, loss of biodiversity and climate change. Far more focus has been placed on major companies, but small enterprises also have a role to play.

Many factors affect a company’s sustainability, and an important one is adhering to the three Rs – Reducing, Reusing, and Recycling. Business owners can rely on environmental audits to assist them in identifying areas within their operations that harm the environment. This creates a baseline for future improvement. They can take further steps like finding experienced companies with locations in NZ that can provide them with guidance and practical support on waste management.

Many companies, big and small, have received criticism for acting irresponsibly regarding their impact on the environment, and some have responded by improving their operations and management practices. But they have to contend with a number of issues as they continue their efforts to improve.

Transitioning to more sustainable business practices typically begins at the top, but it needs to permeate the entire organization to succeed. All employees must understand and share in the value of these changes.

Leadership is more than just a job title. It’s about making decisions, taking action, communicating with others and getting them on board. It’s being able to imagine a shared future and help those around you see its potential. It means caring about your working relationships and protecting them. It means planning for situations that others might overlook, and this includes environmental damage. The sustainability of a business depends on the decisions its leaders make every day.

While the year has been tough, it did show us what life could be like if we took better care of ourselves and our world. Committing to a more sustainable, healthy lifestyle entails allocating resources to safeguarding and improving the health and well-being of people and the environment in which they live.

[Image by kalhh from Pixabay]