Banks, insurers, Māori businesses and iwi, professional services, academics and government have released plans to build a sustainable financial system for New Zealand by 2030.
The Aotearoa Circle’s Sustainable Finance Forum SFF launched its Roadmap for Action after 22 months of research by a team of 50 with input from more than 200 stakeholders.
Ninety-five per cent of those involved in the climate-focused action plan believe that the current financial system is not sustainable or inclusive.
Their report says that the health of the planet is in “peril”.
Three themes – changing mindsets, transforming the financial system and financing the transformation - and 11 priority areas have been unveiled as part of the roadmap.
“Our vision is for a financial system that is more resilient, inclusive, robust, and agile through incorporation of environmental, social and economic considerations in financial decisions,” says SFF co-chair and NZ Super Fund CEO Matt Whineray.
“The current system has proven good at the creation of financial wealth, but has largely done so with less consideration of sustaining the quality of our land, water, climate and communities.
“Changes are needed to embed environmental and social considerations into market mechanisms and fiscal incentives, so ultimately capital allocation decisions by actors within individual businesses are aligned with our shared goals for the planet and its people.”
SFF co-chair Karen Silk, who is also Westpac GM Customer Experience Hub and Sustainable Business Council chair, says on strict economic measures New Zealand has become a more prosperous nation in recent years.
“But this has come at a significant cost when considering broader measures of wellbeing, including environmental and social outcomes,” she says.
“We need to change the way financial decisions are made to ensure our current economic activity is not coming at the cost of the long term health of our environment.
“Across the world’s largest 50 economies, there have been over 730 hard and soft law-policy revisions which support, encourage, or require investors to consider long-term value drivers such as environmental, societal and governance factors.
“Ninety six per cent of these economies have implemented policy to help investors consider sustainability risks, opportunities or outcomes.
“Europe, the United Kingdom, Canada and China are significantly more advanced in the transition towards a sustainable model than New Zealand.”
Mr Whineray added that the SFF recommendations are not novel, with similar initiatives occurring around the world.
“In many areas, New Zealand is a laggard, and without progress or alignment to the changes occurring elsewhere, New Zealand may find its access to international markets is at risk.
“Our roadmap contains practical suggestions for improving the financial system by the end of the current decade.”
Reserve Bank Governor Adrian Orr said the SFF was an important initiative urged everyone to take action.
“We have seen the benefit of working together with our regulatory partners and the financial sector to respond to the impact of the COVID-19 pandemic, and we need to continue this cooperation to have a meaningful impact against climate change,” he said.
“I urge those from across the private and public sectors, communities and iwi, and our broader stakeholders to reflect on and engage with this report.
“Views will be diverse on what matters most, but the discourse is engagement.
“Ultimately, it will be actions, not words that will lower emissions and prepare our economy and communities for floods, droughts and increased disruptions."
The Australian Sustainable Finance Initiative will be launching its own sustainability roadmap towards the end of the month.
The 11 priority areas set out in the for New Zealand include:
Changing mindsets
Responsibility
Capability
Governance
Transforming the financial system
Data
Disclosure
Co-ordination
Account and value
Inclusiveness
Government leadership
Financing the transformation
Resiliency
Standards and pathways
