Although a majority of New Zealand investors have board-level awareness when it comes to climate risks and strategies, only 17% of them are investing in climate solutions such as renewable energy or low-carbon infrastructure.
And only 13% of New Zealand investors have set public targets to increase these investments.
This has led to calls from organisations such the Centre for Sustainable Finance, Mindful Money and Investor Group on Climate Change for stronger alignment between climate ambition and investment practice.
On Tuesday, these organisations released a report called Survey of Aotearoa New Zealand Investors: Climate Policies and Actions 2025. The report includes data from 27 investors - seven asset owners, 17 asset/fund managers and three wealth managers - representing over $263 billion in assets under management. This is around 54% of the country’s total assets under management.
Climate economics
“Perhaps the most significant development over the past year has been the change in climate economics,” the report says.
“Investment incentives now favour investment in climate solutions. It is disappointing that this has not yet been reflected in an increase in the level of investment by asset owners and fund managers in New Zealand.”
At the same time, the report says, climate risks are accelerating.
“Extreme weather events have increased the economic costs of storms, floods, bushfires and drought, resulting in supply chain disruptions and a wide range of additional costs.”
The report also found:
- 91% of investors reported board-level awareness of climate risks and strategies
- 48% of investors have set net zero targets
- 93% are measuring at least some of the emissions associated with their portfolios
- 63% of New Zealand investors surveyed have undertaken a climate-related physical risk or resilience assessment across any of their assets
“Climate risks are on the increase as well as climate opportunities," the report says.
While investors recognise climate as a core part of management, there are also barriers to climate action for them.
The survey found the top three drivers of climate investing for more than half of respondents were the desire to drive positive environmental and social outcomes, fiduciary duty and management of climate risk.
Only 48% of New Zealand investors say regulatory requirements are a main driver. “By comparison, regulatory requirements is one of the top drivers among Australian investors.”
For most investors there was more than one driver they considered when it came to climate investing with 87% of respondents choosing multiple drivers.
Barriers
A lack of clear definitions/frameworks, policy or regulatory uncertainty, lack of data tools, and a lack of resources and staff are just some of the barriers investors say they face when it comes to climate investing
The lack of clear frameworks and regulatory uncertainty may also reflect difficulties in Climate-related Disclosure reporting, the survey says.
The Climate-related Disclosure (CRD) regime requires major organisations to report on how they will be impacted by climate change - covering areas such as climate-related governance, strategy, risk management, and metrics and targets.
In December 2024, former Minister of Commerce and Consumer Affairs Andrew Bayly asked officials to prepare a discussion document on the country’s climate-related disclosures regime.
Over 57% of investors say they currently produce CRD or other Task Force on Climate-related Financial Disclosures reports.
The report says the survey responses make it clear CRD reporting has been a challenge but overall barriers are "generally perceived to be lower than last year".
Investing in climate solutions
“Investment in climate solutions needs to be rapidly scaled up in order to accelerate decarbonisation and the transition to renewable energy,” the report says.
“The economics of investment in climate solutions have become far more favourable in recent years as the costs of solar panels, battery storage and other clean technologies have continued to fall.
“The most popular opportunity for climate solutions investment is renewable energy generation (71%). There have been significant changes to New Zealand’s policies on climate change,” the report says.
Mindful Money CEO Barry Coates says: “New Zealand investors clearly understand the financial imperative of managing climate risk. But despite falling costs and rising opportunities in clean technologies, investment in climate solutions remains low.”
“This is potentially a missed opportunity for both returns and impact.”
Policy advocacy
The report says: “The voice of finance is important in ensuring there is a policy framework that supports investment into climate solutions and aligning with the net zero transition."
The survey found that 65% of New Zealand investors indicated they have engaged in some form of policy advocacy over the past year.
At 39%, the survey found the most common form of advocacy were submissions to climate-related policy consultations, followed by convening or participating in public seminars and events on climate change at 35%.
The report also found 85% of investors with a net zero emissions target have engaged in climate policy advocacy over the past year, and asset managers were more likely than asset owners to have engaged in policy advocacy.
Growing opportunities
The survey says public and regulatory expectations of the finance sector in taking action on climate change have increased.
Other reports show high levels of public concern over climate change - with the annual survey of the New Zealand public on ethical and impact investing showing 74% of New Zealanders expect their fund should reach net zero before 2050.
But the report says few investors have escalation strategies when companies fail to act on climate change and shareholder activism remains limited compared to places like Australia.
Director of investor practice at Investor Group on Climate Change Duncan Paterson says: “Investors are responding to fiduciary duty and risk management, but they’re also hearing the call from clients and the public."
“The next step is to move from measurement to meaningful investment in the transition.”
The report says there are growing opportunities for investment in climate solutions and there’s an increased interest from New Zealand investors.
“However, this has not yet translated into capital flows.”
The next few years will be critical, the report says.
“As CRD reporting beds down, and the scope of reporting widens to include transition plans and the financial estimates of risks, there will hopefully be more emphasis on forward looking action, rather than the focus on reporting on governance, policies and past emissions.”
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