Clark David; Rurawhe AdrianFINANCIAL SECTOR (CLIMATE-RELATED DISCLOSURES AND OTHER MATTERS) AMENDMENT BILLThird ReadingHon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I present a legislative statement on the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill.SPEAKER: That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr DAVID CLARK: I move That the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill be now read a third time.We have a climate emergency and today with the passing of this legislation New Zealand is on track to become the first country in the world to implement law requiring our financial sector to explain how it will manage risks and opportunities into the future. This is a landmark day. The financial sector will be required to supply clear consistent and comparable information which will help with the efficient allocation of capital and markets and over time we will see that this will have an impact on climate risk and opportunity. We will see investment patterns change for the betterment of our climate.I want to begin today by thanking all of those in the financial markets industry who've worked alongside the Ministry of Business Innovation and Employment (MBIE) and who've worked alongside the Ministry for the Environment in the shaping of this legislation to make sure that it achieves its objectives.I want to thank those who submitted to the Economic Development Science and Innovation Committee and who gave their time and expertise to make sure this law achieved its purposes. And of course I would be remiss not to mention the Hon James Shaw and his contribution as he has championed this project from the start so I do acknowledge James Shaw's not insignificant contribution in that respect. I also want to acknowledge one official actually: Geoff Connor from MBIE—him and his team. Geoff now retired has devoted a good deal of time and expertise to this project. I believe it kept him some time from his retirement and I do want to place on record my thanks for his contributions.I want to emphasise this is a big deal. This legislation will make a meaningful difference to New Zealand's ambition to achieve carbon neutrality. One of the most significant risks that our economy faces is actually climate-related risks and while businesses are at the point now where they acknowledge those risks we have not seen consistent reporting on them and we have not always seen good clear information that would inform day-to-day decision-making that would inform where investors put their capital now. It has tended to be viewed as a longer-term issue. Well these risks and opportunities if they're not accounted for cannot be accurately priced investors cannot put their money where their risks are least and with it we have a delay in climate action.This bill aims to correct the current information gap and it will do this by requiring around 200 of our largest financial market participants in New Zealand to disclose clear consistent comparable information about the risks and opportunities that their business carries so that we as investors those who relate to financial markets can make the choices that will shape our future.There are four main elements to this bill. The first is it introduces a mandatory climate-related disclosures regime for most listed issuers along with large registered banks licensed insurers and managers of registered investment schemes.The second thing it does is it requires these disclosures to be made in accordance with standards that will be issued by the External Reporting Board (XRB). Just yesterday Minister Shaw and I launched the first consultation on these standards that will be issued by the XRB. They'll be in line with the recommendations of the TCFD the Task Force on Climate-related Financial Disclosures whose work was published a number of years ago and is well known and they of course responded to the Financial Stability Board's request to provide those recommendations. They're now considered international best practice and are being more and more widely adopted. At the start of this month somebody worked out that TCFD recommendations are now supported across 89 countries and jurisdictions. There are over a thousand financial institutions responsible for assets of nearly $US200 trillion that have regard now to these standards.The third main element of the bill is the Financial Market Authority's responsibility for monitoring disclosures and enforcing compliance using its existing statutory powers and the fourth key element is that the XRB will be able to issue guidance material on environmental social and governance—or ESG—reporting and other aspects of non-financial reporting. That guidance will be incredibly important as we transition to this becoming standard practice for businesses. And I expect to see wider take-up beyond those 200 who will be mandated as investors start to demand clearer reporting more consistent reporting.Countering climate change of course is a global priority and this legislation is in tune with a number of international developments in the short to medium term. Other countries are on record stating their ambition to have mandatory disclosure regimes. The UK wants to have this in place by 2025. Australia Canada France Japan and the European Union are also working towards some form of climate risk reporting for companies. Globally financial market regulators have increased their focus on climate risks too. The UK's Financial Conduct Authority requires UK-listed commercial companies with a premium listing to disclose against the TCFD recommendations for accounting periods beginning at the start of this year. The Australian Securities and Investments Commission has highlighted climate-related risks as a systemic problem in the Australian market and recommended the same TCFD framework be used by listed companies.We're seeing this more broadly. In the run-up to COP26 the most consequential United Nations climate change conference in years investors with $46 trillion in assets under management are urging Governments to adopt five key priorities. And it will surprise no one in this House now that they realise the importance of this legislation—that adopting standards in line with the TCFD recommendations is one of those priorities that those investors are recommending as a response to the climate crisis.The Economic Development Science and Innovation Committee made a number of important amendments and they included excluding smaller listed issuers from the disclosure regime so that it would be a proportionate regime removing the disclosure explain provisions to achieve clear and comparable records so that we didn't have two duplicate systems running so that we can compare them all. That means that all entities will be affected—well we know all entities will be affected by climate change to some extent so it will be reported proportionately to those entities. The Economic Development Science and Innovation Committee amendments also remove the assurance practitioner licensing regime whilst maintaining the mandatory disclosure of greenhouse gas emissions so that a fit for purpose regime can be designed.There was a Government Supplementary Order Paper (SOP) considered during the committee stage of the House and I want to thank members for I think a high-quality debate. Some disagreed with aspects but I think it was a good debate in this House I have to say and I look to members opposite speaking and I acknowledge their contributions. This SOP amended some provisions that had come back from the select committee to make sure that they were tidy. The first change closed a loophole around the appropriate measure to assess the economic significance of debt issuers. Another change made it not an offence when an assurance practitioner's report did not meet the applicable auditing and assurance standards. We want an industry of assurance practitioners to build up here who have the capability and we don't want to be overly punitive at the start of this regime. And indeed to that end another change was achieved with that SOP that increased the time frame for assurance practitioners to send their qualified report to the regulators from seven to 20 days.I am delighted that we have got to the third reading of this bill that we will be the first country in the world to put ourselves on track to mandatory climate disclosure regime reporting and that we will expect our companies to disclose their risks their opportunities around climate change—not just in the long term but for day-to-day investors to understand how they are shaping their businesses and how they are taking account of the growing risks to their businesses of being overly dependent on climate-unfriendly technologies or practices. This bill takes an important step to correct the ongoing and systematic overvaluation of emissions-intensive activities. It strikes the right balance between transparency for investors and consumers and proportionate costs on disclosing entities.Today is a day that we in this House I believe can be proud of. We've provided better clearer information to markets for efficient allocation of capital—not sexy words that roll off the tongue but they do matter; they do matter. At a time today when we pass this bill we will be voting not just for better information in markets; we'll be voting for a better future for this planet. It will be a win for financial markets and it will be a win for the climate. I commend this bill to the House.DEPUTY SPEAKER: The question is that the motion be agreed to.