Aiming to support and accelerate New Zealand’s transition to a zero-carbon economy, the New Zealand Government mandated climate-related financial disclosures for large public listed companies and large financial services organisations.

After New Zealand’s first move, the International Sustainability Standards Board (ISSB) developed a baseline set of standards that other countries, including Australia, have adopted.

Changes have been proposed by the New Zealand regime just one year after it became effective. For the climate reporting entities (CREs) that have been working hard to comply with the regime’s requirements, it may feel like the goalposts are shifting already.

Changing expectations

Despite reporting overall satisfaction with the first tranche of climate statements in its Climate-related Disclosures insights report in December 2024, the Financial Markets Authority (FMA) acknowledged challenges for some entities in obtaining reliable data, incurring higher-than-expected costs and deciding how to make disclosures in the absence of guidance on some topics.

At the same time, the External Reporting Board (XRB) extended the timeframe for adoption of certain elements of the climate standards, acknowledging the challenges encountered by CREs.

At the time of writing, the FMA is considering issuing a class exemption, deferring the requirement for assurance for Scope 3 greenhouse gas emissions disclosures by one year.

The Ministry of Business, Innovation and Employment (MBIE) has also recently announced possible further changes to the regime, in response to the challenges and the risk that the regime is encouraging entities to focus on compliance, rather than positive climate action. MBIE is proposing to increase the thresholds for climate reporting, as well as amend possible liabilities for CRE directors.

No time to waste

We are broadly supportive of amendments that would provide safe harbour provisions for directors in relation to key disclosures. However, proposed amendments to reporting thresholds may turn CREs’ efforts so far into ‘stranded assets’ and could mean these entities are behind the eight ball when global investors ask for climate-related disclosure information.

While we appreciate the challenges experienced by CREs, there is a very real risk that changes to the regime could lead to CREs deprioritising the establishment of the internal systems and processes needed to address climate change.

CREs need policy and regulatory certainty to help them navigate the requirements of this new and complex regime.

New Zealand needs strong and stable climate policy to attract private investment into entities, and initiatives that will reduce emissions and achieve our climate change goals. It is critical that New Zealand keeps its foot on the accelerator if we want to meet our 2030 emissions targets.

Take away

Learn more about CA ANZ’s policy priorities for advocacy and access our policy submissions here.