Oops – our climate change emissions have risen (at the last count) but we are leading the way with financial reporting legislation

Whoopee – another first for our nation.  According to the headline on a Beehive press statement, NZ becomes first in world for climate reporting.

This drew attention to the announcement that New Zealand has become the first country in the world to introduce a law that requires the financial sector to disclose the impacts of climate change on their business and explain how they will manage climate-related risks and opportunities.

Not so praiseworthy, the latest annual inventory of New Zealand’s greenhouse gas emissions shows that both gross and net emissions increased by 2 percent in the 12 months from the end of 2018.

This prompted an exhortation from Climate Change Minister James Shaw that we must strive to do better.

Those two statements emerged from The Beehive along with news that –

  • Cassie Nicholson has been appointed Chief Parliamentary Counsel for a term of five years. This makes her the principal advisor and Chief Executive of the Parliamentary Counsel Office.  She is responsible for ensuring PCO, which drafts most of New Zealand’s legislation, provides high quality services and advice to the Government and Parliament. 
  • One of many government troughs – the Tourism Infrastructure Fund – is  open for applications. Between $13 and $18 million is likely to be available (the $5 million difference suggests Tourism Minister Stuart Nash is not sure how much will be dished out).  Applications are being invited from all councils for a slice of the funding, which is aimed at improving tourism infrastructure, especially in areas under pressure given the size of their rating base.  Nash has already signalled that five South Island regions will be given priority to reflect that jobs and businesses in these areas have been hardest hit by the loss of international visitors.
  • Exceptional employment practices in the primary industries have been celebrated at the Good Employer Awards, held at Parliament. The awards provided the opportunity to celebrate and thank those employers in the food and fibres sector who have gone beyond business-as-usual in creating productive, safe, supportive, and healthy work environments for their people. They are sponsored by the Ministry for Primary Industries and the Agricultural and Marketing Research and Development Trust (AGMARDT).
  • The Government has introduced the Counter-Terrorism Legislation Bill, which strengthens New Zealand’s counter-terrorism legislation “and ensures that the right legislative tools are available to intervene early and prevent harm”.

Justice Minister Kris Faafoi said the counter-terrorism bill is the Government’s first step to implementing recommendation 18 of the Royal Commission into the Terrorist Attack on Christchurch masjidain last year. 

The Bill amends the Terrorism Suppression Act 2002 and Terrorism Suppression (Control Orders) Act 2019. The proposed changes include:

  • making amendments to clarify the definition of a “terrorist act”;
  • create a new offence to criminalise planning or preparation for a terrorist act;
  • create a new offence to more clearly criminalise terrorist weapons and combat training;
  • create a new offence for international travel to carry out terrorist activities;
  • expand the criminal offence of financing terrorism to include broader forms of material support; and
  • extend the eligibility for a control order to include individuals who have completed a prison sentence for a terrorism-related offence if they continue to present a real risk of engaging in terrorism-related activities.

Once the Bill has its first reading, the next step is for the Justice Select Committee to call for public submissions on the Bill.

The introduction of the Financial Sector (Climate-related Disclosure and Other Matters) Amendment Bill – to be given its first reading this week – prompted the declaration that Zealand is the first country in the world to introduce a law that requires the financial sector to disclose the impacts of climate change on their business and explain how they will manage climate-related risks and opportunities.

The Bill will make climate-related disclosures mandatory for around 200 organisations, including most listed issuers, large registered banks, licensed insurers and managers of investment schemes.

Once passed, disclosures will be required for financial years commencing in 2022, meaning that the first disclosures will be made in 2023.

“One way of reading the Climate Change Commission’s draft advice is as a warning that high-carbon investments will be increasingly risky as we get closer to meeting the Government’s climate targets,” Climate Change Minister James Shaw said.

“We simply cannot get to net-zero carbon emissions by 2050 unless the financial sector knows what impact their investments are having on the climate. This law will bring climate risks and resilience into the heart of financial and business decision making.”

Reporting will be based on the Task Force on Climate-related Financial Disclosures (TCFD) framework. 

There are four main elements to the Bill:

  • It introduces mandatory climate-related disclosures for most listed issuers, along with large registered banks, licensed insurers and registered managers of investment schemes.
  • It requires the disclosures to be made in accordance with climate standards that will be issued by the External Reporting Board, or XRB.
  • The Financial Markets Authority will be responsible for the independent monitoring and enforcement of the relevant reporting entities’ compliance with the new reporting standards.
  • The XRB will be able to issue guidance material on environmental, social and governance reporting and other wider aspects of non-financial reporting.

More information available at: https://www.mbie.govt.nz/business-and-employment/business/regulating-entities/mandatory-climate-related-financial-disclosures

In the statement responding to the latest annual inventory of the country’s greenhouse gas emissions, Shaw said:

“Whilst we can see from this report that we are acting in the right areas, it also shows we need to step up our response. The time for delay is over.” 

The Ministry for the Environment’s Greenhouse Gas Inventory is the official annual estimate of greenhouse gas emissions and removals in New Zealand since 1990.

It tracks human-generated emissions and removals that have occurred in New Zealand since 1990. It covers carbon dioxide, methane, nitrous oxide and fluorinated gases.

The inventory is one of four current greenhouse gas emissions statistics. The others are:

  • Stats NZ’s experimental quarterly estimates of greenhouse gas (GHG) emissions, which, because of the time lag producing the Greenhouse Gas Inventory provides more timely data on New Zealand’s production-based emissions. The latest release was published on 8 April.
  • Greenhouse gases by industries and households. This covers only gross emissions. It works by reconfiguring inventory data to provide information on ‘who’ within the economy is emitting, and is designed to understand the economic and social context of emissions
  • Consumption-based emissions, which shows emissions embodied in goods and services consumed by economic residents

The 2021 Greenhouse Gas Inventory shows gross emissions were 82.3 million tonnes of carbon dioxide equivalent (Mt CO2-e) in 2019, up 2 per cent from 2018. New Zealand’s net emissions in 2019 were 54.9 Mt CO2-e, which is also an increase of 2 per cent from 2018.

Gross emissions in 2019 comprised 46 per cent carbon dioxide, 42 per cent methane, 10 per cent nitrous oxide and 2 per cent fluorinated gases. Agriculture and energy sectors were the two largest contributors to New Zealand’s gross emissions in 2019, at 48 per cent and 42 per cent, respectively.

Between 1990 and 2019, gross emissions increased by 26 per cent (17.2 Mt CO2-e). This increase is mostly due to increases in methane from dairy cattle digestive systems and carbon dioxide from road transport.

The Inventory is one of New Zealand’s mandatory reporting obligations under the United Nations Framework Convention on Climate Change and the Kyoto Protocol.

A copy of the full inventory report is available here.

The report released today includes emissions estimates up to the end of 2019. This means it  doesn’t show the impact of measures introduced by the Government since 2019, which include the clean car standard; a ban on coal-fired boilers; putting a cap on the Emissions Trading Scheme (meaning emissions must fall every year); replacing coal-fired boilers in schools and hospitals; and investing billions in new rail, buses, cycle-ways and walking infrastructure.

 Shaw said the period from 2018 to 2019 has taken us further away from meeting the targets we committed to in law and on average New Zealand’s emissions have remained flat for the last fifteen years.

“What this makes absolutely clear is that every part of Government must now come together and help to deliver an Emissions Reduction Plan in line with what the Climate Change Commission recommends. If we can do that, then we can reverse the current trend and finally bring emissions down in line with what the science requires. That plan will need to cover every part of the economy – including, but not limited to, finance, energy, transport, and agriculture.”

It takes about 15 months to collect and analyse the data for each year and prepare it for publication. Therefore, the effects of the COVID-19 outbreak on emissions will not be fully known until the inventory submission due in 2022.

Latest from the Beehive

13 APRIL 2021

Government takes step forward on counter terrorism laws

Carbon neutral government a step closer

Appointment of Chief Parliamentary Counsel

Emissions report shows urgent action needed

NZ becomes first in world for climate reporting

12 APRIL 2021

Awards celebrate the food and fibre sector employer excellence

Tourism Infrastructure Fund now open

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