Aotearoa New Zealand’s first National Adaptation Plan (NAP) was published last week by the Minister of Climate Change. Together with the first Emissions Reduction Plan (ERP) published in May 2022 (see our article here), the NAP forms New Zealand’s first comprehensive climate change mitigation and adaptation response.

In this article, we take a look at what the NAP means for the business community and what some of the risks and opportunities are when it comes to adaptation in the face of climate change.

The NAP states New Zealand’s long-term vision of ensuring New Zealand is climate-resilient. It sets goals to reduce vulnerability, enhance adaptive capacity while considering climate change at all levels of decision-making, and strengthen our resilience.

Our view is that understanding climate adaptation will bring new opportunities for New Zealand’s business community as a whole, and it will be prudent for companies to stay up to date with Government policy and decision-making in this area. They should become familiar with the identified key risks, and assess whether and to what extent those risks could impact their finances, strategy or operations.

The adaptation process

The NAP explains New Zealand’s adaptation to climate change as a continuous process involving risk assessment, planning, implementing, evaluating and adjusting. While the first NAP was prepared by the Government, each subsequent NAP will be prepared by the Climate Change Commission in response to further National Climate Change Risk Assessments published every six years ending in 2050. Every two years, the Commission will report to the Minister of Climate Change on the implementation and effectiveness of the current NAP. The framework for this process is established under the Climate Change Response Act 2002.

Priority and critical climate risks

The NAP was prepared by the Minister of Climate Change in response to 43 priority climate risks identified in the National Climate Change Risk Assessment 2020 for the period 2020 to 2026.

The priority risks fall broadly into the following five outcome areas, demonstrating that New Zealand’s climate adaptation journey will have a broad impact across the private sector, Government, iwi, hapu, whānau and communities:

• Natural environment
• Homes, buildings and places
• Infrastructure
• Communities; and
• Economy and financial system.

The NAP also identifies the 10 most significant and critical risks to New Zealand across the five outcome areas:

• Natural risks to coastal ecosystems
• Natural risks to indigenous ecosystems and species
• Human risks to social cohesion and community wellbeing from displacement of people and communities
• Human risks of exacerbating existing and creating new and additional social inequities
• Economic risks to governments from economic costs associated with lost productivity, disaster relief expenses and unfunded contingent liabilities
• Economic risks to the financial system from instability
• Availability and quality risks in relation to potable water supplies
• Risks to buildings
• Governance risks of maladaptation across all domains due to the application of practices, processes and tools that do not account for uncertainty and change over the long term; and
• Governance risks where current institutional arrangements are not fit for climate adaptation.

Critical actions

The NAP sets out corresponding actions required to address the identified critical risks. Some critical actions are system-wide, but the majority are grouped into the five outcome areas. Actions under the NAP are categorised as urgent critical actions, less urgent supporting actions and future work programmes which reflect current thinking on future needs.

In our view, the following critical actions will be of most immediate interest to New Zealand’s business community as the NAP is implemented, with a focus on critical actions to be implemented through proposed new legislation passed by Government:

• Climate disclosure regime: Supporting high-quality implementation of climate-related disclosures, which may extend the current mandatory reporting regime beyond requiring New Zealand’s largest financial market participants to analyse and disclosure their climate-related risks and opportunities.

• Resource management and Three Waters reforms: Adopting reforms set out in the Natural and Built Environments Bill (see our article here) and Water Services Entities Bill (see our article here), with the objective of including better preparation for adaptation and risks from natural hazards and better mitigation of climate emissions.

• Māori platform: Establishing a platform for Māori climate action which focuses on partnership and representation, supporting Māori-led strategy and alignment, and activating kaupapa Māori and tangata Māori solutions.

• Waka Kotahi: Incorporating adaptation into Waka Kotahi decision-making on land transport investment decisions within the Investment Decision Making Framework and the National Land Transport Programme, and publication of the Waka Kotahi Climate Adaptation Plan in 2022 outlining how it will adapt to climate change through the land transport system.

• Natural environment: Developing, implementing and giving effect to a wide range of existing plans including the Department of Conservation’s Climate Change Adaptation Action Plan, the New Zealand Biodiversity Strategy 2020, the New Zealand Coastal Policy Statement 2010, the National Policy Statement on Freshwater Management 2020 and other environmental and biosecurity plans and programmes.

• Home flood insurance: Seeking advice to Government by the end of 2022 on flood insurance options, to then consider further implementation measures. The key objectives of exploring options are to support access to and affordability of flood insurance, support of community resilience and effectively manage flood risks.

• Emergency management system: Improving the regulatory framework underpinning emergency management and adopting new legislation by 2024 for this purpose, through the National Emergency Management Agency.

• Freight and supply chain strategy: By mid-2023, launching the Government’s strategy for a long-term, system-wide view of the freight system to ensure it is resilient, reliable and prepared for disruption.

These critical actions represent only a select number of the NAP critical actions. In addition, each critical action has a number of related supporting actions and future work programmes. While ambitious, the NAP is New Zealand’s basis for climate adaptation through to 2050, so may be considered appropriately comprehensive.

Challenges and opportunities

We will be particularly interested to see how the Commission reports back on the Government’s achievements in implementing the critical actions identified in the NAP, especially where actions have not been achieved (which may also be impacted by a potential change in Government due to the 2023 elections).

For the private sector, New Zealand companies and businesses would be prudent to take notice of the Government’s direction towards adaptation, key legislative developments, and the significant commercial opportunities and challenges arising from climate adaptation.

Get in touch

If you would like to discuss the NAP or ERP or their impact on your business, please contact one of the experts listed.