On Earth Day, it's timely to reflect on hot legal topics relating to climate change and sustainability. Environmental matters unsurprisingly continue to be at the forefront of issues that businesses and public sector entities need to grapple with. The summaries below highlight some of the key issues and developments that experts across our teams are seeing in this area.
Resource management reform
The Government recently introduced the Fast-track Approvals Bill. The Bill proposes to establish a separate, streamlined process for projects providing significant national or regional benefits to obtain approval. In considering whether projects provide these benefits, decision-makers may consider whether the project "will support climate change mitigation, including the reduction or removal of greenhouse gas emissions". If the Bill is eventually enacted in this form, it is expected to provide an avenue for rapid consenting and construction of climate change mitigation projects.
Implementation of the 'Electrify NZ' policy
As a campaign promise in 2023, the National Party proffered Electrify NZ, a policy proposal aimed at increasing investment in renewable power and electricity lines. Under the proposed policy, resource consents for non-hydro renewable power projects must be issued in one year, and last for 35 years. No consents would be required for upgrades to existing infrastructure and "most new infrastructure". The Government's 36-point action plan announced on 2 April includes taking decisions in the next quarter on measures to increase investment in renewable electricity generation, which we anticipate will include work relating to a new National Policy Statement for Renewable Electricity Generation.
Reviewing aspects of the Emissions Trading Scheme
With the recent change in Government, work on a review of the New Zealand Emissions Trading Scheme (NZETS) which was driving volatility in the carbon market and contributing to failed Government auctions, ceased. The new Government has announced that it is "committed to restoring credibility in the NZETS as it remains the Government’s key tool to reduce emissions". An independent review of the forestry component of the NZETS, in particular to address concerns about excessive charges payable by participants in the NZETS, was announced in February, while the Government's 36-point action plan includes finalising a policy to keep agriculture out of the NZETS.
Growing importance of Environmental, Social and Governance values in property market
ESG values are becoming increasingly important in the property industry, with consideration of ESG principles no longer a "nice to have" but an important contributor to the bottom line. Investors and financial institutions are requiring higher levels of ESG reporting, as are large scale tenants, and those developers and landlords who have stronger ESG performance and transparency in reporting may be able to attract funding and tenants ahead of their competitors. Developers and landowners are also mindful of incorporating ESG principles into their projects, including in terms of construction materials and leasing terms that promote environmentally friendly practices. Green leases (encouraging a collaboration between the landlord and the tenant to reduce the environmental impact of the leased property) are a growing area of interest in the property industry.
Climate related litigation
In February 2024, the Supreme Court unanimously decided to allow an appeal by climate change activist Mike Smith against a Court of Appeal decision to strike out claims Mr Smith had made against seven of New Zealand's largest emitters of greenhouse gases. Mr Smith had brought claims in negligence, public nuisance, and a novel tort of "climate system damage". The Supreme Court decision allows these claims to go to trial in the High Court. Mr Smith is seeking a declaration that the defendants have acted unlawfully, and injunctions requiring the defendants to reduce their emissions. If Mr Smith is successful in his claims, this could open the door to a wide range of climate-related actions, with any entity that produces carbon emissions in excess of net zero potentially at risk of litigation.
Commerce Commission scrutiny of greenwashing and sustainable collaborations
Misleading environmental claims or 'greenwashing' have been a priority area for the Commission, and consumer advocacy organisation Consumer NZ currently has an active campaign targeting greenwashing. It has also been a significant focus of the ACCC, the Australian equivalent of the Commerce Commission, over the last year, after an internet 'sweep' of business websites across a range of sectors identified concerning environmental and sustainability marketing claims. With environmental claims being a focus across the Tasman and of importance for many consumers, scrutiny of such claims in New Zealand looks set to continue. Businesses making claims about the environmental benefits of products and business practices will need to take special care to ensure the claims are substantiated and not misleading.
The Commerce Commission has also helpfully highlighted the need for businesses to take care when collaborating with their competitors to advance environmental goals – recently publishing its Collaboration and Sustainability Guidelines. With such collaborations likely to increase, it will be important for businesses to make sure sustainability collaborations are considered from a competition law perspective and take into account the Commission's new guidelines.
Applying good decision-making principles to public sector decisions on climate issues
Environmental issues and the impacts of climate change give rise to new and complex matters that public decision-makers need to grapple with. This is reflected in the November 2023 Briefing to the Incoming Ministers of Environment, Climate Change, and RMA reform, which notes:
Preparing New Zealand to meet the impacts of a changing climate will require a series of major decisions about risk and cost sharing, and the role of central and local government relative to private home, land and business owners.
Judicial review is likely to be used to challenge climate-related decisions made by public sector bodies, given the potential for such decisions to significantly impact individuals, businesses, and communities. Decision-makers will need to ensure that decisions are made in accordance with administrative law principles: according to law, fairly and reasonably. In many cases, being able to clearly identify options (and the advantages and disadvantages of each) and running robust consultation and engagement processes will be a key component in defending challenges to such decisions.
The application of section 5ZN of the Climate Change Response Act 2002, which allows a body performing a public power conferred under law to take into account NZ's 2050 emissions reductions target, an emissions budget or an emissions reduction plan "if they think fit", may also be further tested as new issues arise.
Other reviews and reform to watch
At COP28, the Minister for Climate Change, Simon Watts, reaffirmed New Zealand's commitment to reduce greenhouse gas emissions by 50 percent below gross 2005 levels by 2030, and achieve net zero by 2050. The Minister also announced an intent to develop a national Climate Adaptation Framework, informed by a range of stakeholders and partners. At present, little information is available about this framework, so this is a space to watch.
The Climate Change Commission is also currently consulting on its review of the 2050 emissions target and whether emissions from international shipping and aviation should be included in the target, and advice on the fourth emissions budget (2036-2404). The Government has announced an independent review of the methane science and targets for consistency with no additional warming from agricultural methane emissions (expected to report back by the end of this year). This review will feed into the Government's response to the Climate Change Commission's advice.
For more information on our climate change and sustainability expertise, or to contact one of our team to discuss, please see our Climate change and sustainability webpage. You can also sign up to receive our Climate change and sustainability publications at Subscribe | Buddle Findlay.
