Does climate-related disclosures support sustainable finance in New Zealand?

Abstract

This study estimates the impacts of the New Zealand Climate-Related Disclosures (CRD) regulation on the performance of financial market. Using the single-group and multiple-group Interrupted Time-Series Analyses, the results show that introducing the CRD Bill immediately boosts the performance of New Zealand financial market. A change in environment-related regulations significantly supports green firms that issue green bonds to finance their environment and climate-related activities and/or sustainable investments. However, the Climate Reporting requirement gradually put greater pressure on the climate reporting entities such as the financial and large-size listed firms as well as listed green firms. The results suggest that the CRD Bill serves as a financial transformation tool to address climate change issues. Developed countries should enact a climate reporting law to promote green finance and achieve sustainable economies. Developing countries should be cautious in making climate reporting regulations mandate for firms that do not have enough resources and capabilities to cope with the new regulations.