Key leaders from the finance, business, environment, church, government and academic communities met today to talk about how the New Zealand financial and economic sector can best respond to climate change.
Climate Change Minister James Shaw says he’s been impressed by the enthusiasm and leadership shown by the financial and business sector during the panel discussion in Auckland.
“Our new Government has made the commitment that New Zealand will transition to a net zero economy by 2050,” says James Shaw.
“The finance sector has a key role to play as part of this transition.
“We need to ensure that finance is going to the right places and at the required scale to support climate change – we call this climate finance.
“New Zealand has committed to making sure finance flows go towards low greenhouse gas emissions and climate resilient development as part of the Paris Agreement,” says Mr Shaw.
A report by economic research collective, Mōhio, commissioned by the Ministry for the Environment, confirms there are multiple opportunities for financial institutions and companies to take action to lower emissions – and many are already leading the way.
The report found climate finance work is already underway and is “increasingly being channelled in directions that prioritise and enable climate-aligned projects to deliver mitigation and adaptation benefits”.
“This is very reassuring and clearly a number of the organisations taking action recognise that climate change presents real risks to the financial system,” says the Climate Change Minister.
“These organisations can see that individual climate action and green activities are not only good for business – but are a crucial part of New Zealand achieving a low emissions, climate resilient future, while also reducing risks to the financial sector.
“There are also opportunities to align climate investment with positive environmental and social outcomes.
“A major concern for this Government is ensuring a just and effective transition, as well as improving the state of our environment,” Mr Shaw says.
The report highlights that globally, the finance going into climate action is around US$ 391-714 billion annually – but what’s required is an estimated US$1.13 trillion annually to limit global temperature increase to 2°C.
“Roughly two thirds of all climate finance globally comes from the private sector, so there is heavy reliance on them to take action.
“The Government will do all it can to support the financial sector to get finance flowing towards to climate action through enabling and assisting with the right balance of financial regulations, information flows and alignment across innovation, research and development.
“The Government is also a direct investor itself, and can demonstrate leadership for other investors.
“Climate finance activities are underway, progress is being made, but this is just the start of a long journey and we need to do more. We need to build on existing leadership and momentum,” James Shaw says.
Some examples of climate finance in New Zealand:
- Under the Confidence and Supply Agreement between the New Zealand Labour Party and the Green Party of Aotearoa New Zealand, the Government agreed to support the introduction of a Green Investment Fund.
- The purpose of the Fund will be to invest in assets that reduce carbon emissions. It is proposed that the Fund receive a $100m capital injection from Government and it is intended that it operate independently.
- The Government is considering how best to build on the existing momentum created by leaders such as the New Zealand Superannuation Fund (NZ Super).
- NZ Super has demonstrated globally what a well-developed climate change investment strategy looks like, and it has joined global initiatives alongside other sovereign wealth funds and the Climate 100+ group who are driving change.
- The Government has begun to consider climate risk disclosure possibilities, including the recommendations made by the Trask-Force on Climate-related Financial Disclosures.
- An existing example of climate finance is the Energy Efficiency and Conservation Authority’s Low Emission Vehicles Contestable Fund. This fund is designed to encourage innovation and investment to accelerate the uptake of electric and other low emission vehicles in New Zealand, which might not otherwise occur.