New Zealand ESG newsletter - October 2024

Oil and gas ban reversal

The Crown Minerals Amendment Bill passed its first reading on 24 September 2024 and has been referred to Select Committee for consideration under urgency. The Bill proposes to amend the Crown Minerals Act 1991 to repeal the ban on new petroleum exploration permits off the Taranaki coast, which was introduced by the previous Government in 2018. Along with reversing the ban, the Bill proposes to:

• Extend the exclusive-use time frame by six years for existing speculative prospectors who were impacted by the ban;
• Reinstate the purpose of the Act to ‘promote’ mining activities. The purpose was changed by the previous Government in 2023 to ‘manage’;
• Change the decommissioning regime to provide greater flexibility and clarity around the types of financial securities that may be accepted. The Bill also limits trailing liability for the cost of decommissioning to the most recent permit holder or participant who transferred out, rather than all previous permit/licence holders; and
• Introduce perpetual liability for permit holders who have completed their decommissioning obligations, for any wells and infrastructure left in situ.?

The Bill delivers on commitments in the coalition agreements and the Government’s promise to take urgent action to address energy security and affordability. The Government’s view is that “… [o]ur petroleum and mineral resources contribute billions of dollars to New Zealand’s GDP, create high-paying jobs and opportunities to develop skills and help to diversify regional economies”.

The Bill has proved divisive, with the opposition stating that it is a backwards step which will damage the environment as well as New Zealand’s progress towards its international climate commitments. It was also reported that Ministry of Foreign Affairs and Trade advised the Government that the Bill would likely breach New Zealand’s obligations in recent free trade agreements with the European Union and the United Kingdom.

The reversal has had an effect on potential wind generation off the Taranaki coast, with one of the largest proponents withdrawing from New Zealand as it cited high uncertainty. Passing the oil ban reversal, and adding mining projects into a fast track approvals system under the Resource Management Act, ahead of setting up an improved framework for offshore wind farms basically gives oil and gas exploration (fossil fuels largely agreed to be nearing the end of their viability) a head start ahead of what is seen as a viable future energy source generation.

The Government intends to pass the Bill by the end of 2024. A condensed Select Committee stage is expected to report back to Parliament by the end of October 2024.

Adaptation woes

As the world continues to experience climate related weather events, and is facing long and expensive recovery efforts, in New Zealand a cross party select committee report into climate adaption has produced only high level recommendations. An opportunity was missed to make a recommendation on who would pay for such recoveries or to advance that debate more than earlier expert reports, select committee inquiries and policy consultations. This leaves communities to have these discussions after the fact, making the process slow and the outcome a lottery, depending on many variables, such as central government support or the ability of councils to support any of the costs. Government at all levels is already aware that more and harsher weather events are expected. The costs are also expected to increase dramatically, with a 2020 report to the Department of Internal Affairs noting that emergency recovery costs to government are expected to double every 20 years.

The select committee recommended that decision makers take into account adaptation when making decisions. This is easier said than done for those authorities whose powers are limited by statute (like councils) who cannot give weight to things outside of what the legislation allows.

Adaptation actions raise some difficulties when implemented, as possible solutions favour some parts of the community, and not others. As many communities are discovering, there are competing interests which some councils are trying to address through broad community consultation.

Resource Management Law: Under Construction

Phase Two and Fast Track

The National led coalition Government has been in power for just over a year. In that time there have been no shortage of changes to the RM (Resource Management) space.

A functional RM system coordinates infrastructure and development, and protects our natural resources and environment. As the current Government has reiterated, the Resource Management Act 1991 (RMA) does not achieve these goals. Instead it is too hard and too expensive for developers and infrastructure providers under the current framework to build houses, roads or other infrastructure and secure energy, including renewables. Hence the Government, throughout this past year, slowly unveiling their three phase approach to reform.

One of the main goals of the current reform package is to ‘make it easier to get things done.’ As of October 2024, we are in phase two (phase one involved replacing the Natural and Built Environments Act and Spatial Planning Act, which happened back in 2023). This current phase has involved a broad suite of ‘targeted changes’ to the resource management system, with the introduction of two bills - which you can read more about here, and here.

Most noticeably in phase 2 has been the introduction of the Fast Track Approvals Bill. At the start of this month, the Government released 149 projects (cut down from 384) for inclusion in the ‘one-stop-shop’ omnibus bill, selected on the basis of their significant regional or national benefits.

The 149 projects will now be listed in the reformed schedule 2 of the Bill. Once the Bill is passed, the projects listed will be able to apply to the Environmental Protection Authority to have an expert panel asses the project and apply relevant conditions. The panel will be the final decision maker here, not the Ministers – limiting the substantial ministerial power afforded to the Minister pursuant to the Bills original form.

To Phase Three and beyond!

In Phase Three, the RMA will be replaced in its entirety. This will come in the form of two new laws, with the ‘enjoyment of property rights’ as a guiding principle. What a system based on the enjoyment of property rights will actually mean in practice is unclear. However Minister Bishop has stated that the new RM legislation must have three core tasks:

• unlocking development capacity for housing and business growth;
• enabling delivery of high-quality infrastructure for the future, including doubling renewable energy; and
• enabling primary sector growth and development (including aquaculture, forestry, pastoral, horticulture, and mining).

At the same time, these objectives must also:

• safeguard the environment and human health;
• adapt to the effects of climate change and reduce the risks from natural hazards;
• improve regulatory quality in the resource management system; and
• uphold Treaty of Waitangi settlements and other related arrangements.

The Minister noted while these are ‘high level’ outcomes, the new system will be narrower in scope and the effects it controls compared to the current system. Key aspects of the new legislation are set to be introduced before the end of the year, will the aim to introduce and pass the legislation before the next election.

Mental health at work – employer's obligations

When the topic of workplace health and safety is discussed, people often think of bright orange cones and ‘CAUTION: slippery when wet’ signs. However, there is increasing awareness about the importance of mental health in ensuring a safe and productive workplace. This month we celebrated World Mental Health Day (10th October), so it is timely to explore employers’ obligations in relation to ensuring a mentally healthy workplace.

Under the Health and Safety at Work Act 2015 (HSW Act), employers have an obligation to eliminate (or if not reasonably practicable, to minimise) risks to health and safety. The HSW Act includes both mental health and physical health in the definition of ‘health’. Employers are required to take reasonable precautions to protect employees against psychological harm and to provide reasonable support for employees affected by mental health or disabilities.

Employers should consider the following:

• Ensure work is designed in a way that does not place excessive workloads or stress on workers;
• Ensure leaders are trained in how to lead and manage staff appropriately;
• Ensure leaders are trained in identifying and addressing workplace mental harm and know how to support staff in these circumstances;
• Consider implementing wellness programs to minimise mental health risks such as EAP or mental health first aid;
• Encourage workers to self-report any mental health concerns and have a process in place for doing so. Ensure that workers feel they can raise their issues, that it will be discussed with them and appropriate action will be taken; and
• Conduct internal ‘check-ins’ of workers who are showing signs of mental harm in order to identify any risks to mental health early.

For more information on employers’ obligations in relation to mental health, read our full article here.

Privacy Act amendments proposed

The Statutes Amendment Bill has been introduced on September 23, 2024, as an omnibus Bill that proposes a number of small but relevant updates to the Privacy Act 2020 (among 41 other Acts). We summarise some of the proposed amendments we consider relevant for businesses who regularly deal with personal information in our article ‘Minor Amendments to Privacy Act Proposed in Statutes Amendment Bill’, however by way of overview, some of the key proposed amendments include:

• Clarifying access to information requests - the Bill repeals agencies’ option to respond to an information request that the personal information requested is not readily retrievable. Instead, the Bill makes this a new ground for agencies to refuse access (which was a ground available to agencies under the Privacy Act 1993). One key outcome of this change is that it gives individuals the right to complain to the Privacy Commissioner if their access request is refused on such grounds.?
• Clarifying agencies’ liability when a notifiable privacy breach occurs – the Bill provides a clarification bridge between section 11 of the Act, which treats information held for or on behalf of an agency as being held by the agency, and sections 120 and 121, which treat the knowledge and actions of officers, employees, agents, etc. as knowledge of the agency. If a service provider becomes aware of a breach, the agency itself is treated as having that knowledge, and if the service provider does anything that causes the agency to fail its notification obligations, the service provider is not liable to the affected individual (they may be liable to the agency if there are appropriate contractual measures dealing with these situations).?
• The Bill also proposes changes to IPP 12, which governs the disclosure of personal information to overseas entities. The new provision clarifies that an agency can only disclose information to an overseas agency in a ‘prescribed country’, provided no specific restrictions or limitations exist for that country.?This is an ironic amendment, considering no ‘prescribed countries’ have been specified in regulations despite the calls from the industry and previous aspirations to publish such regulations since 2021.

The amendments proposed in the Bill continue to refine and clarify the Privacy Act.?The introduction of the Bill and proposed amendments are good reminders for all entities operating in New Zealand to ensure that their internal processes and contractual arrangements with service providers are up to scratch, to benefit from the ability to refuse access requests to information that is not ‘readily retrievable’ and manage their risks from service provider knowledge and actions relating to breaches.?

Hold That Thought Podcast: All in the mind: how can building a resilient mindset become a strategic advantage?

In the latest episode of Hold That Thought, Employment and Immigration Partner?Renee Butler?and former Head of High Performance for Auckland rugby Ben Meyer delve into the concept of resilience and its significance in a personal and professional context, exploring what resilience means, how to cultivate it, and why it is essential in both personal and professional settings. They also discuss:

• How to foster a resilient mindset and how this can transform your team
• Stories of resilience
• How you can navigate the challenges of today's changing economic landscape
• Why you need resilience

Listen via your favourite podcast platform or on our website here.

Subscribe to our podcast to receive updates.?

This newsletter contains contributions from: Ana Coculescu, Hermione Kemp, Josh Pierson, Harriet Phillips and Melissa Tahere.

For further information on ESG, please visit our ESG: Global Solutions Hub where you can find updates from many jurisdictions, including New Zealand or reach out to Partner Nicky McIndoe.