RIAA recommends the Finance and Expenditure Committee rejects the Bill.

The Bill misconstrues the role of ESG factors in private sector risk management as being an ethical or ideological decision. To properly assess current and future risks, institutions must include those within the broad definitions of ‘environmental’, ‘social’ and ‘governance’ – terms which have been increasingly (and inaccurately) politicised as being more than the basic elements of good risk and return analysis and assessment.

RIAA submits that lenders, not the Government, are best placed to the conduct these risk assessments and do not require such legislative intervention to improve their ability to make profitable credit decisions.

In addition, the Bill compromises New Zealand’s ability to attract vital and finite global capital, a key priority of the current Government which has directed public funds to this objective. To attract well-priced capital, NZ companies will need to manage, mitigate and measure the risks of climate change with global investors accepting this to be a financial risk and a part of the ordinary risk and return calculation.

RIAA refers to and supports the submissions made by Mindful Money and the Centre for Sustainable Finance: Toitū Tahua on this Bill to the Committee.