A nation that seemed to be leading the way in climate action has all but reversed an important law that made accounting for climate risk a normal part of business.

What's happening?

New Zealand's climate-related disclosure law was the first of its kind, but just as officials were touting it on the world stage, they were planning rollbacks that have now come to fruition, Radio New Zealand reported.

The Ministry of Business, Innovation, and Employment responded to complaints from businesses that the reporting initiative was too expensive, gutting the legislation that looked to make business, investment, and lending decisions part of "mainstream accounting," the outlet stated.

Banks, insurers, and other companies were to "publicly report how climate change could affect their bottom lines … to help investors see which companies were prepared for a warmer, riskier world," per RNZ.

With a new government at the helm following Prime Minister Jacinda Ardern's 2023 resignation, the MBIE caved to Turners Automotive and others. That company said its first report — just seven pages — cost 1 million New Zealand dollars.

By early this year, leaders were set to halve the number of companies that had to produce disclosures. Now, only businesses with a market value of NZ$1 billion — instead of just NZ$60 million — will have to comply, reducing the number of reportees from 164 to 76.

"In addition, directors will no longer be deemed liable if companies break the reporting rules," according to Bloomberg, which noted Christopher Luxon's government also relaxed a methane pollution goal and an offshore drilling ban and will not tax farmers for pollution, among other climate policy decisions.

Why is this important?

While it's nothing new for politicians to backtrack or completely change the way their predecessors governed, this has been particularly galling to Kiwis who were bolstered by New Zealand's stance among signatories to the Paris Agreement. The deconstruction of the leading legislation has knocked the climate action leader from its pedestal.

"New Zealand led the world by introducing the first climate related disclosures regime in 2022," Lawyers for Climate Action NZ Executive Director Jessica Palairet told RNZ. "We now have the dubious nod of likely becoming the first country in the world to weaken our climate related disclosures regime, just two years into its adoption and without strong evidence that this is necessary or will strengthen our capital markets."

What's being done about climate disclosures?

Bloomberg added that similar changes have been made in Europe and Singapore.

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