New climate legislation and your business

Today, future-looking businesses can’t ignore climate change. In 2021, new legislation will mean changes for some Kiwi organisations and opportunities for all of us.

The ‘Zero Carbon’ Act and the Financial Markets Conduct Act have some changes that will come into place this year. Fortunately, new tools make it easy for small businesses to be more responsible in reducing climate change. Here’s some help for small businesses getting ready for the journey ahead.

The Zero Carbon Act is leading change

The Climate Change Response (Zero Carbon) Amendment Act 2019 gives a framework for New Zealand to reduce emissions by 2050. Our new independent Climate Change Commission – He Pou a Rangi – is a result of this legislation.

In February 2021, He Pou a Rangi proposed carbon budgets for public consultation. The government will commit to carbon budgets by the end of this year.

So why do we need these carbon budgets? The budgets act as stepping stones towards New Zealand's contribution to the Paris agreement. Above all, the budgets help us build an economy that is climate-resilient and socially responsible. For everyday small businesses, it means there will be more resources, advice and opportunity to get involved. You’ll find some links below that may be useful if you’d like to know more.

The proposed budget has three targets for our emissions to be reduced from 2018 levels.

  • A 2% average reduction each year between 2022 and 2025

  • A 17% average reduction each year between 2025 and 2030

  • A 36% average reduction each year between 2030 and 2035

You can read He Pou a Rangi’s full advice and proposal here.

Mandatory reporting and the TCFD offer something for all businesses

Through the Financial Markets Conduct Act, New Zealand is the first country in the world to announce it will require specific entities to make financial disclosers on climate-risk. The requirements apply to publicly listed companies, large insurers, banks, and investment managers. However, it’s likely to affect small businesses indirectly, as there will be a growing expectation from the market that leading businesses show their consideration of climate risk, even if it’s voluntarily.

The climate-risk components of the Act draw on the framework from the international Task Force on Climate Related Financial Disclosures (TCFD).

The TCFD framework is a useful approach for most businesses who want to show they’re thinking and planning for the impact of climate change. It focuses on four areas.

  • Governance: Ensuring the oversight of climate risk at the highest level of your business leadership

  • Risk management: Setting processes that identify, assess and mitigate climate-related risk

  • Strategy: Building climate consideration and resilience into short and long-term strategy

  • Metrics and Targets: Assessing risk and progress across climate-related performance such as greenhouse gas emissions

The right tools make it easy to get started

When you consider climate change and climate risk for your business, there are plenty of easy tools to get you started.

Gen Less is a resource from the government that aims to help New Zealanders choose clean, clever energy use. It has tools for both businesses and individuals. You could begin by assessing your emissions and building an Energy Savings Plan. You can find advice on how to do this and create your own policy on the Gen Less website.

The Gen Less energy management tool allows you to rate yourself against other companies with. You’ll get recommendations on how to make a start, or to improve what you’re doing now.

If your interests are in financial services, the Task Force on Climate Financial Disclosures has information about scenario planning for climate-risk through their Knowledge Hub articles.

You can also keep up-to-date on the performance in various industries through their regular status reports including the Task Force on Climate-related Financial Disclosures 2020 Status Report as a pdf.

Friends for a brighter future

We can’t talk about climate-risk for business without mentioning two of Tomorrow Inc’s friends who are focused on brightening our future; the Sustainable Business Network and Carbon Click.

Tomorrow Inc is an investor in the Sustainable Business Network, and we encourage others to join us. Sustainable Business Network is New Zealand’s largest sustainable business organisation. We care deeply about the Network because it sets a bold vision and offers encouraging support. Sustainable Business Network truly delivers on its vision of ‘empowering business so people and nature prosper’.

Carbon Click makes it easy for any retailer to take climate action. Their tool offers carbon offsets at point-of-purchase.

Or, simply pick up the phone

If you’re interested in understanding how to build climate considerations into your business strategy, integrating them into your programme design, or finding the best targets and metrics then we’d be happy to talk.

Tomorrow Inc has expertise across a range of frameworks including Sustainable Development Goals, BCorp certification, materiality assessments, the Global Reporting Initiative and more.

Contact us today.