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New Zealand Climate Change Law for Financial Firms explained

New Zealand Climate Change Law for Financial Firms explained

Relevance:

  • GS 3 || Environment || Governance: International || Conventions & Protocols

Why in the news?

New Zealand recently introduced a bill on Climate Change for financial firms. The bill is the first of its kind in the world. New Zealand has fixed 2050 as the deadline to become carbon neutral.

Present context:

New Zealand has become the first country to introduce a law that will require banks, insurers and investment managers to report the impacts of climate change on their business

Climate Change Law:

  • All banks with total assets of more than NZ$1 billion ($703 million), insurers with more than NZ$1 billion in total assets under management, and all equity and debt issuers listed on the country’s stock exchange will have to make disclosures.
  • The bill, which has been introduced to the country’s parliament and is expected to receive its first reading, requires financial firms to explain how they would manage climate related risks and opportunities.

Bill Disclosures:

  • Around 200 of the country’s biggest companies and several foreign firms that meet the NZ$1 billion threshold will come under the legislation.
  • Disclosures will be required for financial years beginning next year once the law is passed, meaning that the first reports will be made by companies in 2023.
  • It has introduced several policies to lower emissions during its second term, including promising to make its public sector carbon-neutral by 2025 and buy only zero emissions public transport buses from the middle of this decade.
  • Prime Minister Jacinda Ardern, who returned to power last October delivering the biggest election victory for her centre-left LabourParty in half a century, had called climate change the “nuclear free moment of our generation.”

Climate Emergency:

  • New Zealand declared a climate emergency on December 2, 2020 and pledged that its public sector would become carbon neutral by 2025.
  • New Zealand Prime Minister Jacinda Arden said that the climate emergency declaration was based on the climate change findings of an Intergovernmental panel, which stated that to avoid more than a 1.5 degree Celsius rise in global warming, the emission would need to be cut by 45 percent from 2010 levels by 2023 and reach zero by 2050.

What is Climate Emergency?

  • In its ongoing online petition, Greenpeace New Zealand is urging the government to declare a climate emergency since people are “facing more extreme weather events, catastrophic loss of wildlife and a crisis over access to freshwater and food”.
  • In 2019, the Oxford dictionaries declared “climate emergency” to be the word of the year, a word that reflects “the ethos, mood, or preoccupations of the passing year, and have lasting potential as a term of cultural significance”.
  • It defines climate emergency as “a situation in which urgent action is required to reduce or halt climate change and avoid potentially irreversible environmental damage resulting from it”.
  • New Zealand joins 32 other countries including Japan, Canada, France and Britain that have declared a climate emergency.
  • In her first term she passed a Zero Carbon Bill, which sets the framework for net zero emissions by 2050 with an exemption for farming, and banned new offshore oil and gas exploration.
  • Nearly half of New Zealand’s greenhouse gas emissions come from agriculture, mainly methane.
  • The government agencies in the nation will now have to measure and report emissions and offset any they can’t cut by 2025.
  • The programme also includes an immediate focus on phasing out the largest and most active coal boilers and reducing the size of the car fleet and purchasing more electric or hybrid vehicles. The government will also set a green standard for public sector buildings.
  • The programme will be backed by a fund worth NZ$200 million to finance the replacement of coal boilers and help in purchase electric or hybrid vehicles

Agriculture largest source of climate pollution

  • The global non-governmental environmental body, Greenpeace welcomed the declaration, but challenged the government to follow through with policy and action, as it means tackling New Zealand’s largest source of climate pollution: agriculture. Almost half of New Zealand’s greenhouse gas emissions come from agriculture, mainly methane

New Zealand’s Climate Change minister James Shaw was quoted as saying in a press release on November 26, “We are in the midst of a climate crisis that will impact on nearly every aspect of our lives and the type of planet our children will inherit from us. Every part of Government will have an important role to play in this. And we know there is no time to waste. According to the world’s leading scientists New Zealand have just over nine years left to cut global warming emissions in half.

Conclusion:

Climate change is issue that is not limited to one country or the like New Zealand every country should come together and take serious stand against climate change

Mains oriented question:

Climate change is no longer just an environmental problem; it is a singular issue with multi-scalar characteristics that affects everyone from the global to the local level. Comment on and explore the complexities of addressing the global issue of climate change. (250 words)