The Centre for Sustainable Finance (CSF) has announced an upcoming public consultation on the draft criteria for the Aotearoa New Zealand Sustainable Finance Taxonomy (NZ Taxonomy). The NZ Taxonomy will provide a classification system to identify economic activities that contribute to New Zealand’s environmental objectives. Its purpose is to facilitate the flow of capital toward sustainable practices across relevant industries.
The consultation is being led by the CSF, which is coordinating the development of the NZ Taxonomy under the direction of the Minister of Climate Change. The consultation offers a valuable chance for businesses in the relevant sectors (initially, agriculture and forestry), as well as investors, to influence the design of the NZ Taxonomy. Submissions help shape the final draft of the NZ Taxonomy which is expected to be submitted to the Minister by the end of 2025.
What is the NZ Taxonomy?
As discussed in our recent article (here), the NZ Taxonomy is intended to create a classification system for various economic activities based on environmental performance. As with similar models overseas, the purpose of the NZ Taxonomy is to reduce uncertainty and complexity in assessing the sustainability credentials of investments in order to support the flow of private capital towards businesses actively transitioning to a low-emissions, climate-resilient economy.
More than 50 jurisdictions are developing sustainable finance taxonomies. The NZ Taxonomy is designed to align with international frameworks while ensuring relevance to New Zealand’s domestic context. It will include both “green” finance categories (i.e. financial activities aimed at supporting environmentally beneficial projects) and “transition” finance categories (financial flows that help high-emitting sectors or entities shift towards low-carbon or net-zero pathways). The latter will be particularly important for hard-to-abate sectors such as agriculture and construction. As with various taxonomies overseas, the NZ Taxonomy will include requirements to confirm that a relevant activity does “no significant harm” to certain specified environmental objectives and to comply with a series of minimum social objectives.
The NZ Taxonomy is expected to be voluntary but is expected to be a useful tool for financial institutions, investors, and insurers in capital allocation, product development, risk assessment, and sustainability reporting.
Scope of the consultation
As expected, this initial consultation focuses on the agriculture and forestry sectors (although the NZ Taxonomy is likely to expand to other industries such as construction, transport, and energy in due course). The consultation focuses on:
- Criteria for activities which make a substantial contribution to climate change mitigation activities in the agriculture and forestry sectors.
- The methodological approach to defining “green” and “transition” activities (this will be relevant to all sectors for which mitigation criteria are developed).
- “Do no significant harm” criteria to safeguard against other negative environmental outcomes.
- Minimum social safeguards (to protect “social outcomes”).
The CSF has confirmed that separate criteria for climate change adaptation and resilience in the agriculture and forestry sectors are under development and will be consulted on in September 2025.
Implications and next steps
The consultation opens on 16 June 2025 and closes on 13 July 2025. Ahead of the consultation, New Zealand businesses should consider how they may be affected. In particular:
- The current priority sectors (agriculture and forestry) should ensure that the criteria are designed in a way that is practical and achievable. This will also be indirectly relevant to other sectors likely to be designated in due course (e.g. construction and real estate, energy, agriculture, fisheries, transport and industrial manufacturing). Although it is voluntary, if the NZ Taxonomy is widely adopted by lenders and investors there will be significant value in conforming in order to access the lower cost of capital available to taxonomy-aligned businesses.
- Banks, fund managers and other investors will also have an interest in ensuring that the NZ Taxonomy is well-designed and that the criteria are clear (reducing their risks of promoting ESG funds, green bonds and sustainability-linked loans involving the relevant sectors).
The consultation offers a valuable opportunity to input on the design of the criteria (e.g. whether the right activities have been included and whether any have been missed, and whether any relevant industry schemes and benchmarks should be incorporated) as well as the overall clarity and usability of the criteria.
For further information or assistance with engaging in the consultation, please contact the authors or your usual Bell Gully adviser.
Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
