NZ has yet to announce climate-warming pledge for Glasgow summit but RBNZ is developing guidance for our finance sector

The clock is ticking on global warming, the  Dominion-Post  warned this  week ahead of  the Climate Change Summit in Glasgow. 

The  opening  paragraph  of  the  report  was  ominous: 

“Even after  countries — excluding NZ — unveiled  ambitious new  pledges  to  cut emissions,  it’s still  not  enough to achieve the global of 1.5 degrees  Celsius of climate warming,  a  new  report  found.”

The  article  points  out that NZ  has been  notably  absent   from the burst of  announcements that have been made, but  suggests we may  make our declaration in Glasgow.

It  argues that, as  a  small economy,  NZ’s nationally determined contributions (NDCs) will  not sway  the  dial  much.

But Green  co-leader  James Shaw,  who is  representing  NZ  at  the  conference, may  find anything he says is not  greeted  with applause.  NZ, like  Australia,  is  regarded  as  a  laggard  on  climate  change.

The  biggest  emitters  of  all may be keen to divert attention from their own actions.  China,  for  example, is responsible for  28% of  global  emisssions and  is  reported  to  be   building  more  fossil-fuelled power  stations.

James  Shaw  is  said  to  be  taking 26  advisers  with him.  He is  a  dedicated  disciple of action to avert climate  change  and  almost  certainly  volunteered  for  the  Glasgow  mission .

Back  in NZ, there  is  some  trepidation as  the  outcome  of  COP26 is  awaited.   The  agricultural  industries on which the  country depends  for much its  export  earnings  these  days fear  that the  big emitters’  focus on methane  emissions will be  targeted. 

For  that  reason  it  might have  been  expected  PM Jacinda Ardern would have  represented  NZ  at the  summit,  seeking  to   generate  goodwill.  She  might have brought her charm into play to divert attention from our agricultural emissions.      

As  the world  leaders were preparing for Cop26, the  first  big scare of the  green  era (as The  Economist put it) was unfolding. Since  May the price of  a  basket of  oil, gas, and coal has  soared  by 95%.

The  resultant panic  is a  reminder  that  modern life needs  abundant energy

The  panic  has also exposed the  deeper  problems  as the world  shifts  to a  cleaner  energy  system.

“Without rapid reform there will  be more  energy crises  and perhaps a popular revolt against climate change. Energy investment is running at half the investment needed to  meet the  ambition of  reaching  net zero by 2050.”

Back  in Wellington,  the  Reserve  Bank is reported to have turned  its  attention  to  the  risks imposed by climate  change.  The central bank is to develop a guidance note on climate change risk management for banks, insurers and non-bank deposit takers and plans a climate change scenario-based bank stress test. It  is working towards fully embedding climate risks into its core functions of financial stability and monetary policy.

“We recognise the need for more action than current, that is why we have laid out our commitments and future plans around climate change in this report,” Reserve Bank Governor Adrian Orr says.

Later in 2021 the Reserve Bank says it will start developing a guidance note on climate change risk management for the entities it regulates.

“The guidance will support the Climate Related Disclosure plans and will cover governance, risk management, scenario analysis and disclosure. The guidance will not impose new requirements in relation to climate risks; rather it will support compliance with the [Reserve] Bank’s existing risk-management and governance requirements, and will provide guidance to assist entities to manage climate risks.

“Our approach will follow that of other appropriate regulators, for instance the Australian Prudential Regulation Authority and the Monetary Authority of Singapore, and will focus on physical, transition and liability risks. We believe that it will be crucial to work with our regulated entities to ensure that they are in positions to meet the new reporting expectations. We have heard from industry that key challenges include establishing appropriate scenarios, managing uncertainty, data availability, and capacity.”

It’s  good  to  know  the mandarins  of  1 The Terrace  are on the job.

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