Advisers and fund managers who are dragging their feet on climate disclosures have another think coming, according to Matt Raeburn, senior policy analyst at the Ministry for the Environment.

Raeburn, speaking at an FSC: Get in Shape event, told the assembled advisers, “TCFD: know it, learn it, love it because it is going to be coming up a lot over the next few years.”

Back in September 2020, New Zealand was the first country to sign up to the TCFD disclosure framework, which requires all registered banks, credit unions, building societies, managers of investment schemes and licensed insurers to comply with the groups' standards of climate reporting. 

Raeburn says that the reporting will impact “effectively New Zealand’s financial system. All banks, all insurers, managed funds and basically every company listed on the NZX.”

Though the required disclosures will only come into force in 2022, Raeburn says that “There are a lot of companies that are doing it already, Westpac for example have just released their first TCFD report.”

Speaking to advisers at the event, Raeburn said: “This is something that you are going to want to be paying increasing attention to because these disclosures are going to be identifying potential exposures and sensitivity to climate impacts, which again are things that are already there but just haven’t been well accounted for. In the same way that the pandemic risk was already there until it was very much exposed.”

The fact that Westpac is already disclosing its climate related information to the public should be a sign of how central the TCFD is going to become by the time 2022 rolls around. But Raeburn says that advisers need to be thinking about what information the disclosures offer now, to best make the most of the offered information.

“The theory behind this framework is that by giving investors this information, that they can start to make better decisions that will drive corporate behaviour away from those climate-related risks and pursuing better opportunities.

“I think that this is going to make more of a difference at an institutional investor level. The big investment firms like BlackRock. They are the ones that have been clamouring for this new disclosure, that highlights risks and opportunities that are not being accounted for now but have already existed.

“For smaller individual investors and advisers, I think that value aspect is going to come into play. To help people make decisions based on who is credibly reporting their climate related risks is important not just to individual investors but the country as well.”