NZ election countdown: sustainable finance must progress
With the election coming up, it’s critical that Aotearoa New Zealand doesn’t lose focus on sustainable finance.
Finance is being recognised as a critical lever by governments around the world to support and drive the rapid transition underway towards a clean and prosperous low carbon economy in line with Paris Agreement targets.
Governments around the world are setting out clear sustainable finance strategies that help to align public and private sector finance in support of the big climate and sustainability challenges of our times. These efforts aim to unlock the investment required to support the necessary economic transition.
Most recently, the Australian Treasurer is about to release a draft sustainable finance strategy – a whole of government plan to align finance with a stronger and sustainable economy. This builds on work long underway across many of our major trading partners, not least the European Union’s Sustainable Finance Strategy and the United Kingdom’s Green Finance Strategy.
There is a real risk of New Zealand falling behind global players on its commitments to sustainable finance. This risk is playing out in real time, as seen by the accelerating race to attract capital to support a low carbon economic transition, as most clearly exemplified by the US Inflation Reduction Act which has created over 100,000 jobs and is unlocking billions in investment in clean energy sectors across the US.
With the election upon us, any new government should clearly set out their approach and commitment to driving a sustainable finance agenda to ensure our own capital markets remain competitive, attract capital and unlock investment in the low carbon transition.
It’s critical that we don’t rest on our laurels.
Whilst we were one of the first nations to mandate climate related disclosures, have driven mandatory responsible investment considerations within default KiwiSaver providers, have established a sovereign green bond program, and have built strong expectations of consideration of ESG by crown financial institutions, there remains much to be done.
RIAA has released our Aotearoa New Zealand Policy Platform for the next government of New Zealand, which sets out the important policy objectives we will look to see adopted and driven to maintain strong momentum. It is against this policy platform that we’ll be looking to see steps taken by the next government to ensure momentum is maintained.
To position New Zealand as a strong player in global markets, attract investment at a time when global capital is flowing fast towards sustainable assets, companies and governments, and support New Zealand’s sustainability objectives overall, the government should start by developing and adopting an integrated and coordinated approach in the form of a national sustainable finance strategy.
A national Sustainable Finance Strategy will be an opportunity to accelerate further the shifts required to reach net zero and support a just energy transition.
As part of such as strategy, and in alignment with global capital markets developments, such policy commitments should be undertaken that include:
- Supporting the development of a taxonomy of green economic activities
- Taking the next steps in disclosures by rapidly adopting the global ISSB sustainability disclosure standard
- Considering and adopting the Taskforce for Nature-related Financial Disclosures
- Supporting the further uptake and adoption of the Aotearoa Stewardship Code
- Promoting sustainable financial product labelling initiatives by building further on the existing industry standards
Sustainable finance can play a key role in supporting a prosperous future for our nation, from building infrastructure and supporting renewable energy, to investing in affordable housing and new technologies and financing the transition to net zero emissions.
A robust sustainable finance sector will ensure Aotearoa has a strong, stable and resilient financial system that attracts capital.
RIAA looks forward to working with the next government on this important agenda, and anticipate that this work will be recognised as an important part of the pathway to a prosperous and sustainable New Zealand economy.
About Simon O’Connor
As the CEO of RIAA, Simon operates at the intersection of economics, finance and sustainability and has extensive international experience as an economic adviser, investment analyst and sustainability consultant across finance, corporate and not for profit sectors.