New Zealand has announced laws that will force large companies to reveal the climate impact of their actions in a move they hope will create a global precedent.
From 2023 all Aoteroa/New Zealand companies with assets of more than NZ$1billion (US$700 million) will be required to report on the effects of their actions on climate change. This will force transparency of not only companies that emit greenhouse gasses directly, but the impact of loans and investments made in others.
"This law will bring climate risks and resilience into the heart of financial and business decision making," Climate Minister James Shaw said in a statement.
Once passed, the law will apply not only to the nation's 200 or so largest companies but, perhaps more significantly, foreign corporations with significant holdings in the country.
Although the legislation will not directly force companies to reduce emissions, it will leave nowhere to hide from consumer pressure.
“Requiring the financial sector to disclose the impacts of climate change will help businesses identify the high-emitting activities that pose a risk to their future prosperity, as well as the opportunities presented by action on climate change and new low carbon technologies,” Shaw said.
The legislation is accompanied by more familiar government activities, such as the replacement of coal and gas boilers at public institutions like schools and hospitals. The government has committed itself to a carbon-neutral public sector by 2025, and for the whole country to follow by 2050.
New Zealand achieved global praise (and some hostility) with its decisive COVID-19 response. It reaped the rewards as one of the few places in the world where death rates actually fell. Re-elected Prime Minister Jacinda Ardern is keen to tackle even bigger problems.
However, a nation of 5 million that accounts for just 0.12 percent of global carbon emissions can't change the atmosphere much alone. Moreover, with an electricity system already run mostly on hydro and geothermal power, New Zealand's main sources of emissions are in sectors like agriculture and long-range transport where progress is slower than power production.
The solution Shaw has proposed is to institute world-leading actions which, while their impact in New Zealand will be small, could make a big difference if larger countries choose to follow suit.
Minister for Commerce and Consumer Affairs David Clark made this explicit, saying: "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."
The new legislation comes in response to a review of the Resource Management Act (RMA), which when passed in 1991 was the world's first national legislation inspired by the concept of sustainable management of resources. Other nations have copied the idea, and aspects of New Zealand's RMA, but improved on its many defects, leaving it needing drastic overhauls to reclaim the global lead.