- The initial emphasis of the mandatory comply or explain regime will be on explain
- A Cabinet decision will be some months away
- Minister warns of a danger that the COVID-19 crisis could delay action on climate change
Climate Change Minister James Shaw has indicated New Zealand's move to a mandatory comply or explain regime for climate-related financial disclosures will be matter of "gently and slowly".
He said the initial emphasis will be on explain.
The Minister was speaking to a Chartered Accountants Australia and New Zealand webinar on the financial impact of environmental risks. The webinar focused on policy and was the first in a series of four.
He said the Government was looking at introducing a mandatory comply or explain regime to New Zealand following the Productivity Commission's report on low-emissions pathway.
That report recommended the Government put in place mandatory (on a comply or explain basis), principles-based, climate-related financial disclosures through the Financial Reporting Act. These disclosures to be audited and accessible to the general public.
The Government has consulted on key aspects of that recommendation, including regarding the Financial Reporting Act.
However, Shaw said "We need to step into this gently and slowly.
"We don't have the systems and businesses don't have capacity or the know how to execute this."
We don't have the systems and businesses don't have capacity or the know how to execute this."
"We'll err on the side of explain rather than comply," he said as the Government works towards implementing a mandatory regime.
He indicated a Cabinet decision will be some months away pointing out it is "hard to get things on the Cabinet agenda at the moment".
Shaw spoke of his time working for PwC (not as an accountant he hastened to add) about 20 years ago in the UK.
At the time, there were significant moves towards integrated reporting, he said while noting PwC's mantra that is if it doesn't get measured, it doesn't get managed.
He warned of a danger that the COVID-19 crisis could delay action on climate change. "We know historically that when there is a significant crisis, we tend to defer action on climate change and the environment."
During the GFC, the response in New Zealand was making sure that rising costs of the ETS didn't drag down the recovery.
"That means we essentially lost a decade of action on climate change."
"We can't do that again. We are out of time."
Shaw said the country should now be thinking about the new economy, post Coronavirus.
"It is important that we make decisions now that are consistent with a low-emission pathway."
"The effect of COVID-19 is temporary; climate change is not going away soon."
Why environmental risks matter to NZ businesses.Watch the webinar