While it seems investors and companies are backing off of ESG and climate commitments, some jurisdictions are moving full steam ahead. From mandatory reporting requirements in the EU and California to financial greenwashing litigation and regulation in the UK and Australia, ESG matters are becoming increasingly regulated. For its part, New Zealand is slashing its carbon allowances in half by 2029. A move it hopes will boost the effectiveness of its Emissions Trading Scheme (ETS). A recent article from ESG News discusses the change stating:
“New Zealand is taking decisive action to restore confidence in its Emissions Trading Scheme (ETS) by significantly reducing the number of emission credits available between 2025 and 2029. The government announced that the availability of units, which represent one metric tonne of carbon dioxide or its equivalent, will be cut from 45 million to 21 million.”
The move is expected to drive up carbon prices on the New Zealand ETS as early as 2025, making it more expensive for companies to emit greenhouse gasses and hopefully leading to a national reduction in emissions. This is a great example of how national policy can impact businesses directly and shows why ESG professionals should stay informed on these issues. Industries across New Zealand will now have to account for the increase in carbon price and adapt accordingly. Those who have worked towards emissions reductions and sustainable alternatives will likely be burdened less by the slash in carbon allowances than those who chose to “wait and see.”
Our members can read more about emissions regulations here.
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