What the series tracks

This series provides a comprehensive national climate change risk assessment for Aotearoa New Zealand. It tracks the ongoing and potential future risks to the country’s economy, society, natural environment, and built infrastructure from the escalating effects of climate change. The assessment evaluates distinct climate-related risks across seven interconnected domains: the natural environment; the built environment; people, health, and communities; the Māori world (Ngā mea hirahira o te ao Māori); the economy and finance; sectors relying on the natural environment; and governance. By systematically tracking these elements, the series identifies the most significant risks requiring immediate attention, focusing on both the severity of the hazards and the current level of policy readiness to address them.

Methodology

The methodology relies on assessing the three main components of climate-related risk: hazard, exposure, and vulnerability. Risk severity is evaluated on a four-point scale (minor, moderate, major, extreme) across three distinct time horizons: the present day, mid-century, and the end of the century. For the end-of-century horizon, the assessment utilises scenarios based on the latest international climate science, including low and high climate impact pathways. Policy readiness is subsequently assessed on a four-point scale to determine the extent to which existing and planned adaptation actions will mitigate these risks. Furthermore, the assessment introduces ratings for indirect and cascading risks to evaluate the interconnectedness of different hazards and identify adaptation actions that can yield multiple co-benefits. The analysis also deeply integrates kaupapa Māori assessments to ensure risks specific to iwi/Māori are comprehensively captured.

Key findings and themes from this edition

This edition identifies key risk areas as the most significant, highlighting an urgent need for coordinated action. These critical areas include water infrastructure, buildings, road and rail networks, social and community wellbeing, emergency management, risks to the Māori world, ecosystems and biodiversity, forestry, central and local government funding, and adaptation decision-making and delivery. A central theme is that climate-related damages are already substantial and growing. Sea levels are rising faster than historical averages, and extreme weather events, such as severe storms and flooding, are becoming more frequent. Consequently, there is an escalating threat to the structural integrity and performance of critical infrastructure. Additionally, the report emphasises that the natural environment is approaching irreversible thresholds due to compounding pressures from invasive species, habitat fragmentation, and altered climatic conditions. The assessment also underscores significant gaps in policy readiness, noting that current governance structures are often fragmented, under-resourced, and overly reactive rather than proactive.

Relevance and uses for finance professionals

For finance professionals, this benchmark series serves as an essential tool for evaluating physical climate risks across a wide range of asset classes and sectors. It provides detailed, region-specific insights into the vulnerabilities of critical infrastructure, property, and supply chains, which are vital for accurate asset valuation and risk management. The report highlights the accelerating costs associated with disaster recovery and climate adaptation, offering important data for assessing sovereign and municipal debt, public finance stability, and long-term infrastructure investment viability. Furthermore, the assessment sheds light on the insurance sector’s shift towards risk-based pricing and the growing likelihood of insurance retreat in highly exposed coastal and flood-prone areas. This has direct implications for mortgage risk, real estate investment, and corporate lending. Finally, the analysis of sectors highly reliant on the natural environment, such as agriculture, forestry, and tourism, enables investors and analysts to better integrate physical climate risks into their strategic allocation and portfolio management processes.