Date posted: 30/06/2025 5 min read

New Zealand is the global leader in climate risk reporting

New CA ANZ research confirms New Zealand is the global leader in climate risk reporting.

In my last Acuity column, I wrote about the ‘shifting sands’ of climate-related disclosures, particularly proposed changes to the mandatory climate-related non-financial disclosures regime in New Zealand.

The proposed changes included deferring some reporting requirements. The risk here is that the work undertaken to date by climate reporting entities will become stranded assets. The entities may end up under pressure and in a delayed position when global investors begin demanding climate-related disclosure information.

Pleasingly, however, a new report from CA ANZ’s reporting and assurance team, led by Amir Ghandar FCA, has highlighted some positive action on the other side of the climate-reporting coin – disclosures of the impact of climate risks on financial statements.

The Effects of Climate-Related Risks on Financial Statements report shows that 60% of NZX 50 companies are including climate risk information in their financial statements, up from 40% last year, making New Zealand the global leader.

That statistic compares favourably to 34% of the ASX 200 and 36% of companies across the rest of the world, both of which have seen only single-digit growth since 2023.

The report, prepared in collaboration with the University of Melbourne, the University of Queensland and the Australian Accounting Standards Board (AASB), reviews the 2024 financial statements of the ASX 200 and NZX 50 companies, and of some of the largest companies in the rest of the world.

The increase in reporting has been powered by a big jump in 2024 across utilities and companies providing consumer staples and non-essential goods. What this report reveals is that New Zealand companies are increasingly considering the financial impacts of climate risk and they see the need to inform investors about those impacts.

Of course, disclosing climate risks in financial statements isn’t a nice-to-have. Accounting standards are a mandatory requirement. Disclosure is essential where the risk is material. However, risk identification and quantifying anticipated financial impacts are complex tasks and can take time to crystallise into a clear process.

Climate risk is reflected in company financials in various ways, including potential asset impairment (38%), critical accounting estimates (22%) and in estimating the useful lives of assets (13%). For example, heavy emitting manufacturing facilities may need to rethink asset deployment, upgrade equipment to mitigate emissions, or set timelines for taking assets offline to meet commitments and policies.

Severe weather events such as Cyclone Gabrielle and the increased frequency of droughts have financial implications for companies’ operations, assets and financing.

CAs have an important role to play here – particularly in the reporting and assurance area – to document, disclose and assure in a way that meets the highest standards, whether those set by the XRB in New Zealand, or the AASB/AUASB in Australia.

As Ghandar has said, the report shows that, when it comes to capital allocation decisions, climate risk is not just about doing good or a philanthropic ethos, it’s a significant financial and strategic factor.

Financial statements remain a very important way for investors and government agencies to get a view of risk of all types, including climate-related risks. More than ever, New Zealand needs that view to help enable strong and stable climate policy that attracts private investment into entities, and initiatives that will reduce emissions and achieve our climate goals.

Take away

Read the full report here.

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