New Zealand - Dodging disaster with climate disclosure
Covid-19 has taught us a lot. One of those lessons has been our capacity as government, business and society to respond together and quash a threat on our lives and livelihoods. And so it should be with climate change.
There is an opportunity in front of our government and the business community to work together to truly tackle climate change. To take the lessons of Covid-19 and re-imagine a more sustainable future, to set a policy direction and make investment decisions now that will lower New Zealand’s emissions profile, encourage a more sustainable economy, increase wellbeing and avoid catastrophe later.
But there is a disconnect. While some organisations recognise climate change as a material threat, there has been limited progress understanding the financial implications (and opportunities) of this threat on businesses and their balance sheets. This lack of progress comes at a time when companies face increased scrutiny and pressure on their actions to mitigate climate change and investors are looking for climate-resilient investments.
Currently, the global financial system is built on models that do not reflect the full cost to businesses from the response to climate change, but it must. Globally, Covid-19 saw investments move from equities to cash and other liquid, safe-haven assets and now that capital is looking for a home.
Fund managers in charge of billions of dollars have a duty to act in the best interests of their investors. With heightened risk radars thanks to Covid-19, climate change is looming large as a material financial risk to their investment portfolio.