Understanding climate reporting – Q&A with Sue Walker, Harbour Asset Management

New climate reporting in Aotearoa means that from this year, many investors will be able to see the greenhouse gas emissions of the funds they invest in. We sat down with Sue Walker, Senior Manager Responsible Investment at Harbour Asset Management* to find out more.

What is the new climate reporting, and why does it matter?

In New Zealand there is new climate reporting legislation, with around 200 entities required to produce climate-related disclosures (CRD). The Aotearoa New Zealand Climate Standards provide a framework for investment providers** to report on the climate-related impacts of their investments, including climate risks and opportunities.

This matters because the new reporting brings better transparency for investors, making it easier for you to compare things like greenhouse gas (GHG) emissions for the funds you invest in. You can also find out whether your investment provider has set targets to reduce emissions in its portfolios, and view the progress being made towards achieving those targets.

For investment providers, climate data provides valuable information for guiding investment decisions. While there is currently a higher degree of variability in climate data, this will improve over time, making comparison across providers easier for investors.

How does climate risk show up in my investments?

Climate risk consists of two key elements – physical risk and transition risk.

	Physical risk

This relates to activities that are impacted by the physical aspects of climate change due to their significant dependence on the natural environment. This type of risk manifests itself through either an acute event (such as flooding or wildfires) and chronic risk or longer-term shifts in climate (such as an increase in temperature). There are many examples of significant weather events where the intensity of these events is attributed to climate change.

• The North Island flooding and Cyclone Gabrielle in early 2023 saw companies have short-term interruptions to their operations, as well as longer-term impacts to their business, as insurance doesn’t always cover the full cost of events like this.
• Many companies are beginning to invest in adaptation measures such as sea walls and storm water management, to help mitigate the impact of future events.

	Transition risk

Transition risk reflects a company or country’s readiness to transition to a low-carbon economy. This includes policy, legal, technological and market changes in response to mitigating and adapting to climate change. Carbon-intensive companies are more likely to be impacted by the transition to a low-carbon economy, however, the demand for raw materials and new climate regulations will mean almost every sector and geography will be impacted.

• Climate commitments are starting to be reflected in trade agreements with key trading partners. For example, the New Zealand EU free trade agreement that commenced in May 2024 contains ambitious outcomes on climate action and commitments under the Paris Agreement. The agreement also eliminates customs duties on a list of environmentally beneficial goods.
• Inclusion of climate commitments in trade agreements will require both country and company level action to reduce emissions and protect the environment, with an expectation that companies with strong sustainability credentials will benefit from these policy settings.

Where can I learn more?

Climate statements for the BNZ KiwiSaver Scheme, YouWealth, and Private Wealth Series for the period to 31 March 2024 were recently published by BNZ Investment Services Limited (BNZISL). BNZISL is the manager of investment products available through BNZ and, as at 31 March 2024, was a wholly-owned subsidiary of BNZ. BNZISL ceased to be owned by BNZ from 1 May 2024 and is now a wholly-owned subsidiary of Harbour Asset Management Limited.

You can view and download the climate statements by clicking the links below. These have more information on the governance, strategy, risk management, metrics and targets for each scheme, and include carbon metrics for the specific fund that you’re invested in:

• 2024 BNZ KiwiSaver Scheme Climate-Related Disclosures
• 2024 YouWealth Climate-Related Disclosures
• 2024 Private Wealth Series Climate-Related Disclosures

The reporting builds on the net zero GHG emissions commitments made in relation to these investment products and details progress against BNZISL’s emissions targets as at 31 March 2024.

The BNZISL responsible investment policy forms guiding principles for how BNZISL decides where to invest, and drives the inclusion of environmental, social, and governance (ESG) factors considered in investment decisions. This helps ensure BNZISL investments reflect the evolving attitudes of its investors and society.

*BNZ Investment Services Limited, a wholly owned subsidiary of Harbour Asset Management Limited, is the issuer and manager of the BNZ KiwiSaver Scheme, YouWealth and Private Wealth Series. Download a copy of the Product Disclosure Statements:

• BNZ KiwiSaver Scheme Product Disclosure Statement (PDF 1.1MB)
• YouWealth Product Disclosure Statement (PDF 1.4MB)
• Private Wealth Series Product Disclosure Statement(PDF 517KB)

**’Investment providers’ refers to managers of registered investment schemes.

Investments in the BNZ KiwiSaver Scheme, YouWealth and Private Wealth Series are not bank deposits or other liabilities of Bank of New Zealand (BNZ) or any other member of the National Australia Bank Limited group. They are subject to investment risk, including possible delays in repayment. You could get back less than the total contributed. No person (including the New Zealand Government) guarantees (either fully or in part) the performance or returns of the BNZ KiwiSaver Scheme, YouWealth or Private Wealth Series, or the repayment of amounts contributed. National Australia Bank Limited, the ultimate owner of BNZ, is not a registered bank in New Zealand but a licensed bank in Australia and is not authorised to offer the products and services mentioned on this article to customers in New Zealand.

BNZ Investment Services Limited (BNZISL) uses the BNZ brand under licence from Bank of New Zealand, whose ultimate parent company is National Australia Bank Limited. No member of the FirstCape group (including BNZISL) is a member of the NAB group of companies (NAB Group). No member of the NAB Group (including Bank of New Zealand) guarantees, or supports, the performance of any member of FirstCape group’s obligations to any party.

This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. No representation or warranty is made as to the accuracy, reliability or completeness of any statement made in this article. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article. Any opinions in this article are not necessarily shared by BNZ or anyone else.