Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Mandatory Climate-related Reporting On The Way For Some NZ Businesses

The Government is establishing a standardised approach to climate-related reporting for certain entities to disclose their governance, plans and progress on emission reduction in a way that’s transparent and consistent. It has introduced an amendment to the Financial Markets Conduct Act (2013) to make climate-related reporting mandatory for many New Zealand organisations. These requirements come into effect from 1 January 2023, and an initial partial draft of the proposed standard was released for public comment today.

Why now?

“Climate change is a clear and present danger to businesses everywhere, and this poses a major risk to the stability of financial systems globally,” says David Pacey, National Technical Partner at Grant Thornton New Zealand.

“For example, a business might experience supply chain disruptions due to adverse weather events, or consumers’ buying behaviour might change as their preferences shift to more sustainable, environmentally friendly products and services. And there’s the increasing cost of obtaining insurance for climate risks to consider as well,” says Pacey.

Therefore, the pressure on organisations to be more transparent about their exposure to climate-related financial risk is increasing.

Pacey says, “New Zealand businesses currently provide little or no information about the implications of this risk, and where disclosures are actually made, the outputs and reports are often delivered inconsistently; this reduces transparency for investors and makes accurate reporting about the country’s progress towards a zero-carbon future difficult”.

In addition to greater transparency, standardised climate related financial disclosure is also expected to enable climate risk to be adequately priced in capital markets and help the Government achieve its zero-carbon target by 2050.

Who is impacted?

  • It's expected that regulated institutions will be mandated to report on their levels of climate related risk, including:
  • Registered banks, credit unions, and building societies with total assets of more than $1 billion
  • Managers of registered investment schemes with more than $1 billion under management
  • Licensed insurers with more than $1 billion total assets under management, or annual premium income greater than $250 million
  • Equity and debt issuers listed on the NZX with a market capitalisation greater than $60 million
  • Crown financial institutions with more than $1 billion total assets under management

Privately owned businesses and other organisations are currently exempt from the proposed disclosure requirements. However, Pacey says that having a consistent method of reporting climate related risk against emission reduction targets is a compelling value proposition for forward-thinking entities to jump on board. There is an increasing demand from suppliers, employees and customers for businesses to be transparent about how they are managing their impact on the climate.

“Private businesses reporting their impact on the environment against a robust framework will have a competitive edge and positive engagement with their brands”, says Pacey.

What reporting will be required?

The External Reporting Board (XRB) is tasked with developing the standard for climate-related disclosures. The standards are being developed in line with the Task Force on Climate Change-related Financial Disclosures (TCFD) recommendations. The standard will also require organisations to assess the risks and opportunities of climate to their business across four themes including governance, strategy, risk management, and metrics and targets.

The initial draft of this new standard has been released for a four-week consultation period. Submissions close on Monday 22 November 2021.

“Although impacted businesses can have their say about the proposed disclosure regime, the time to start preparing for the reporting process is now, as mandatory reporting will start in just over a year. Organisations’ short-term focus should be gap analyses of their current climate reporting and assessing assurance options regarding the proposed disclosures,” says Pacey.

© Scoop Media

Business Headlines | Sci-Tech Headlines


R&NTU: KiwiRail strike notices withdrawn following new offer

Strike notices on KiwiRail have been withdrawn. Rail and Maritime Transport Union General Secretary Wayne Butson says following negotiations between the RMTU and KiwiRail, a new offer from KiwiRail will be taken back to union members for ratification... More>>

Banking: Stress Tests Show Strengthening Bank Resilience

The latest stress tests carried out by the Reserve Bank of New Zealand – Te Pūtea Matua show strengthening resilience in the banking sector and the benefits of continuing to build capital buffers... More>>

Statistics: Building Activity Down In September Quarter
The volume of building activity in New Zealand fell 8.6 percent in the September 2021 quarter, compared with the June 2021 quarter, Stats NZ said today. Residential building activity fell by 6.4 percent in the September 2021 quarter, while non-residential building activity fell 12 percent... More>>

Reserve Bank: Deputy Governor Reflects On Time At RBNZ
Central bankers must continue to look forward to guard against the unpredictable, Deputy Governor Geoff Bascand says in a speech published today. Mr Bascand joined the Reserve Bank of New Zealand – Te Pūtea Matua in 2013 during the aftermath of the Global Financial Crisis... More>>

Xero: Data Reveals ICT Expenditure Key To Small Business Sales Growth
Xero, the global small business platform, today released a new report which shows New Zealand small business ICT expenditure has increased 25 percent compared to pre-pandemic levels - more than the UK (20%) and Australia... More>>

Fonterra: Lifts Forecast Farmgate Milk Price Range And Revises Earnings Guidance At First Quarter Update

Fonterra Co-operative Group today lifted its 2021/22 forecast Farmgate Milk Price range, reported a solid start to the 2022 financial year and revised its earnings guidance... More>>

Canterbury Museum: New Research - Bald Haast's Eagle Feasted On Moa Guts

New Zealand’s extinct Haast’s Eagle (Hieraaetus moorei), the largest known eagle, gulped down viscera like a vulture and may even have been bald, new research suggests... More>>