23 August 2023 – The Reserve Bank of New Zealand – Te Pūtea Matua has published a Bulletin article highlighting high level results from a survey of prudentially regulated entities on climate change.
The survey asked regulated entities, including banks and insurers, to report their progress around climate-related risk management and readiness for the mandatory Aotearoa New Zealand Climate Standards disclosure regime.
The Bulletin follows an initial industry self-assessment survey on climate-related risk management and disclosure conducted in 2019 – the findings of which were published in the May 2019 Financial Stability Report. That exercise provided very helpful insights which contributed to our Climate Changed 2021 and Beyond report.
This second survey was conducted earlier this year. The main purpose of this survey was to understand participating entities’ progress in identifying, measuring, and managing climate-related risks, along with their preparedness for meeting the mandatory Aotearoa New Zealand Climate Standards disclosure regime ahead of the first statements to be published in early 2024.
The survey was voluntary to complete and sent to every prudentially regulated entity that is subject to the aforementioned disclosure regime; 41 in total. 29 survey responses are included in the analysis.
Key findings:
No entity stated it is ‘not at all’ vulnerable to climate-related risks, assuming no mitigating actions are taken; 26 were at least ‘somewhat vulnerable’ with the other 3 were ‘unsure’.
Entities view climate change as already compounding a range of business risks and expect this will increase in the future.
Almost all entities’ governance bodies are discussing climate-related risks on a regular or ad hoc basis (28 out of 29).
Concerns about climate-related risks are influencing day-to-day business decisions more than they were when we conducted our inaugural survey in 2019. However, only 3 out of 29 entities stated they have ‘fully embedded’ different aspects of climate-related risk management in the manner they already do for other business risks.
Just over half of the entities (16 out of 29) have not yet undertaken climate-related scenario analysis, albeit all plan to do so in the next 12 months.
No entity assessed itself as ‘at risk for not meeting’ the new disclosure regime. However, most entities (25 out of 29) need to complete ‘significant further work’ as they prepare their inaugural climate statements.
The findings from these surveys will help inform further work across the sector from both industry and regulators regarding the management and disclosure of climate-related risks.
Read the bulletin
Industry survey on climate-related risk management and disclosure https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=8c9e353f02&e=f3c68946f8
More information
May 2019 Financial Stability Report https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=ec6493aef3&e=f3c68946f8
Climate Changed 2021 and Beyond https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=327caa56fb&e=f3c68946f8
