Feedback on the Sustainable Finance Forum’s Interim Report

The Sustainable Finance Forum’s Interim Report summarises why New Zealand needs to shift to a sustainable economy and sets out priority areas and potential pathways for creating a more sustainable financial system by 2030. The Forum’s Final Report and a roadmap for action are expected to be published by the end of July.

type: Submission
author: By Institute of Directors
date: 28 Feb 2020
read time: 7 min to read

Summary of feedback

We urge the Forum to take a strategic approach to any proposed corporate governance reform (including taking a holistic and system-wide view of the responsibilities of boards, directors and organisations) and search for opportunities to drive change through leadership and other lateral solutions rather than regulation.

Long-term purpose: There have been a number of initiatives globally promoting the importance of corporate purpose in the last 6 months and we expect to see an increasing focus on this as companies continue to adapt to stakeholder and shareholder expectations of business in the 21st Century. In New Zealand, we support change being driven through leadership rather than regulation. We also encourage the Forum to make a recommendation that New Zealand develop an investor stewardship code to promote long-termism.

Fiduciary duties: Corporate governance regimes around the world are giving more recognition and weight to stakeholder interests. This is also an important matter that deserves greater consideration in New Zealand and we would welcome the opportunity to be involved. We also highlight the trend of increasing director responsibilities and liability and the consequential impact.

Corporate reporting: We highlight the trend and importance of more holistic corporate reporting and note that it’s vital to balance requirements with the type and size of entity (eg as per the tiered approach of the XRB financial reporting framework). We also urge the Forum to consider the disclosure burden on all companies (and particularly listed companies) in arriving at recommendations in its final report.