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The world’s first mandatory climate risk reporting requirements, adopted by New Zealand, are a positive for the country’s financial firms, says Moody’s Investors Service.

Last week, the country’s parliament passed a new law that requires large banks, asset managers and other financial institutions — along with large listed companies — to report on climate risk, making it the first country to adopt such requirements.

The new rules, based on the framework from the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), are to take effect in January 2023.

In a new report, Moody’s said that the new rules are “credit positive for New Zealand’s financial institutions because they will make institutions that are not already doing so assess the impact of climate-related risks.”

“The development of these reporting standards could also provide institutions with new ways to assess climate risks and to increase the visibility of such risks within their governance and risk frameworks,” the rating agency said.

Additionally, the new requirements will likely benefit investors, Moody’s said, as the rules will improve “the transparency and comparability of climate-related risk disclosures …”

Earlier this month, the Canadian Securities Administrators (CSA) also proposed the introduction of mandatory climate-reporting standards for listed companies, which would also be based on the TCFD standards. Those proposals are out for comment until Jan. 17, 2022.