Sustainable finance is a critical part of the transition to a more sustainable and low-emissions economy.
For New Zealand it is about building on success to date, and encouraging the development of a more fulsome approach to sustainable investing by both the public and private sectors.
The Government has begun shifting investment behaviour already through a comprehensive policy approach, including:
● Passing the Zero Carbon Bill to provide a clear signal of the pathway for getting our greenhouse gas emissions to net-zero and reforming the Emissions Trading Scheme.
● Establishing NZ Green Investment Finance Ltd to partner with the private sector to accelerate low emissions investment in New Zealand.
● Establishing a Climate-Related Financial Disclosures regime that will require major participants in the financial markets to report on the risks to their business from climate change transition.
● Joining the Coalition of Finance Ministers for Climate Action in recognition that meeting climate goals require not only environmental policies but also "climate-fiscal" policies like considering climate change in annual national budgets.
Our goal is to build on this significant work, incorporating the new economic context brought about by the Covid-19 pandemic.
The recovery and rebuild from Covid-19 presents opportunities to put our sustainable finance goals into action, including building on New Zealand's clean, green international reputation to attract new investment in the productive sectors of the economy.
It will be increasingly important to look for win-win investments where we can drive emissions reductions, lift broader environmental sustainability, boost productivity, and improve sustainable employment outcomes.
The Government cannot finance the entire low-emissions transition. That's why we are focusing our efforts on partnering with the business and finance community, and incentivising private capital into sustainable investments.
As the world recovers and rebuilds from Covid-19, it's important that countries work together to promote sustainable finance practices in our efforts to reduce emissions.
Another important aspect of the sustainable finance discussion is around the international tax system and making sure there is a level playing field so our goals aren't undermined by the ability of entities to use international tax havens or structures to avoid their obligations.
During the past term, the Government passed the Taxation (Neutralising Base Erosion and Profit Shifting) Act, which has considerably improved the integrity of the tax system by preventing multinationals from using various base erosion and profit shifting strategies to avoid paying tax in New Zealand.
In addition, New Zealand is proactively working at the OECD to find an internationally agreed solution for including the digital economy within tax frameworks and for implementing a global minimum tax to help address remaining base erosion and profit shifting issues.
The OECD has been progressing the work in this area and has recently released updated blueprints for public consultation.
The OECD aims to reach agreement by mid-2021.
We are committed to finding an international solution within the OECD but will also consider an interim Digital Services Tax if agreement at the OECD is not possible.
New Zealand — and the world — is making progress on incorporating sustainable finance practices to support the transition to a low-carbon economy.
As we progress this work, it's critical that we don't allow it to be undermined by any gaps in the international tax system.