Association Webinars: Climate Transition Risk in New Zealand Equities


We examine climate transition risk in New Zealand (NZ) equities given that NZ's greenhouse gas (GHG) emissions are dominated by agricultural emissions and that carbon pricing has been in place since 2008. Only around half of NZX50 companies disclose emissions and that disclosure is driven by, inter alia, size and profitability. In terms of 'hypothetical carbon liabilities', Air New Zealand and Contact Energy are most exposed for Scope 1 and 2 emissions, but when upstream scope 3 GHG emissions are added, Fonterra (multinational dairy firm) is most at-risk. An asset pricing analysis shows that only volatility and extreme price movements in carbon price returns are priced. Overall, the results suggest that despite there being material climate transition risks for NZX50 equities, limited disclosure and low carbon prices mean that these risks are not likely to be fully priced in stock values.


Dr. Ivan Diaz-Rainey is Director of the Climate and Energy Finance Group (CEFGroup) and Associate Professor of Finance and at the University of Otago. He is Associate Editor of the Journal of Financial Regulation and Compliance and has previously held academic positions in the UK, Abu Dhabi and Italy. He has conducted research, policy and consultancy work for the ADBI, OECD, E.ON UK plc and ECMI. His research has been published in leading journals, including Climatic Change, Energy Economics and The Energy Journal. His current research interests include; financial regulation and climate, carbon and energy finance.


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