The ongoing impacts of extreme natural events, the need to plug gaps in climate data and the reaction of the business world to new climate-reporting rules.
These were all topics of discussion in yesterdayās climate change panel hosted by property data company CoreLogic, which saw experts from the overlapping ground between climate science and finance sift through some of the meatier implications of the changing climate for the financial stability of Kiwis, businesses and the broader economy.
Belinda Storey, managing director for climate risk economic research group Climate Sigma, said while climate risk isnāt having a noticeable effect on property values at present, itās only a matter of time before it does.
āThe market isnāt currently incorporating climate risk and if it is, just a small portion of it,ā she said. āProperties that are currently exposed to extreme weather damageā¦ say infrequent floodingā¦ those properties have got a time limit on them and thereās going to be a limit on how long itās going to be safe.ā
She said this would be a very difficult message to deliver to affected home-owners, and at the moment the timeframe before they are affected is probably much shorter than most people realise.
One issue at the forefront of the financial sector trying to react to climate change is a mismatch between climate data and financial timeframes.
This could be in the form of forecasts detailing what the climate will be like in 2100 ā useful in scientific terms, but less so for home-owners more interested in the next few decades.
āPrimarily the data has been developed to answer scientific questions, not to answer financial questions,ā Storey said.
Meanwhile, Ivan Diaz-Rainey of the University of Otago and the Strand Marsden Fund Project said the increasingly precarious nature of properties by the coast or in flood zones would affect New Zealand particularly badly, given most of the countryās material wealth is tied up in housing those have historically been two of our favourite places to build a house.
āWe donāt know if weāre going to end up in a two degree world or a three degree world, and they can make a big difference in terms of how long a house has left,ā he said.
However, he said there is still a fair amount of uncertainty over exactly how big of an effect changes to the climate will have here, with factors such as elevation, location and hydrogeology all potentially affecting what happens to any given property over the coming decades.
āLooking forward is really hard ā nobody has a crystal ball,ā he said. āWe are getting to the stage where we can say an area is vulnerableā¦ but if we really want to price an individual [house], that becomes a problem.ā
Mark Baker-Jones, director of climate business advisers Te Whakahaere, echoed this sentiment, saying there are still necessary data and tools missing to help the financial sector move to a lower-emissions model.
He has been involved in helping businesses transition to the new climate-disclosure legislation, which means businesses and financial organisations are to report on what they are doing to shift to a more sustainable, low-emissions economy.
Baker-Jones said over just the past six months, he has seen āan enormous amount of maturingā from organisations who might have initially looked at the new rules with trepidation.
āSix months ago they were in a little bit of a panic mode, but Iāve seen quite a shift,ā he said. āParticularly with the more sophisticated bigger financial institutions who looked at this as a risk but now are seeing it as an opportunity.ā
He gave the example of the profit potential of investment in renewable energy or transport infrastructure.
Olaf Adam, senior manager of sustainability at Westpac, said he had seen the opportunities of a shift towards more carbon-friendly business practice that is ultimately good for business.
āThe things New Zealanders need to do will make the country a lot more efficient,ā he said. āIt will pay for itself over timeā¦ that means for a bank thatās a bankable proposition.ā
Adam said there will be two types of organisations when it comes to disclosure: those that treat it as a compliance exercise, and those that treat it as a chance to reassess and restructure the business around lower emissions.
Around 200 entities will be required to make climate-related disclosures from 2024, including banks, investment scheme managers, insurers and Crown financial institutions worth more than $1 billion.