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Arotakenga Huringa Āhuarangi and ensuring stability through climate risk disclosure

September 20, 2019

Contacts

Partners Matt Conway, Gerald Lanning, Sarah Scott
Special Counsel Mark Baker-Jones
Senior Associates Joanna Lim, Victoria Anderson

Climate change (inc Zero Carbon Act and Emissions Trading Scheme)

Climate Change Minister, Hon James Shaw has released Arotakenga Huringa Āhuarangi: A Framework for the National Climate Change Risk Assessment for Aotearoa New Zealand

The framework will enable the production of the first National Climate Change Risk Assessment, which is required under the Zero Carbon Bill. It is an essential tool in informing priorities for action under the National Adaptation Plan that will be prepared following on from the risk assessment.

Relevant to local authorities, the timeframes for assessing risks are developed with reference to local authority planning horizons, including the cycles of council long-term plans, and the 30 year planning timeframe for local government infrastructure strategies. The methodology also defines the stages in a complex process of initial risk assessment, detailed risk assessment, and finally, adaptation and decision urgency assessment.

The relevance of the framework to organisations lies, amongst other things, in the methodology the Government will use to prioritise different climate risks when it carries out the national assessment. It would be a beneficial exercise for organisations that are carrying out, or intending to carry out, their own risk assessment, to consider how it aligns with the framework because ultimately, the National Adaptation Plan will set out the government’s approach to addressing the impacts of climate change.

Although the framework acknowledges that the climate risk assessment must consider inter-related risks to physical assets, the economy and society, the framework primarily focuses on consideration of climate risk as a function of physical events or impacts in this iteration. However, in the financial sector, and more broadly, it is the non-physical risks that are considered more likely to influence financial stability. For this reason, critics of the framework may claim it falls short for now in that disclosure of non-physical climate risk is necessary so that market actors, that are “adversely affected by the uncertainties related to the timing and speed of the process of adjustment towards a low-carbon economy”, are able to act.

The methodology is underpinned by seven mātāpono (guiding principles), and an emphasis on engagement, with inclusion of best practice information on engaging with Māori. These underpinning principles acknowledge that climate change impacts are not isolated, but have overlapping domains and cascading effects.

Mātāpono

  1. Manaakitanga (Care and reciprocity)

  2. Kaitiakitanga (Intergenerational sustainability)

  3. Whanaungatanga (Connectedness and relationships)

  4. Ōhanga (Prosperity)

  5. Rangatiratanga (Leadership and autonomy)

  6. Kia mahi ngātahi (Engagement and participation)

  7. Kia āwhina (Support).

Ultimately, the success of the National Climate Change Risk Assessment and quality of the decision making process that follows on from it will depend on the quality of the information that is disclosed and fed into the assessment, and organisations clearly have a part to play in that. The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) has been established to develop voluntary, consistent climate-related financial risk disclosures applicable to financial-sector organisations. 

We are currently working on reporting frameworks for disclosure of climate risk across an even broader range of organisations, including local authorities, and will be hosting NZ’s first workshop about the TCFD on 16th and 17th October in Auckland and Wellington. See registration details here.