NZX Welcomes Practical Changes To Climate-Related Disclosures

NZX today welcomed the Government’s proposed changes to the mandatory climate-related disclosures (CRD) regime, saying it will remove unnecessary compliance disadvantaging New Zealand companies and the economy.

“These adjustments are practical and sensible, and will be strongly welcomed by the New Zealand listed market,” NZX’s General Manager of Corporate Affairs and Sustainability Simon Beattie says.

“As a member of the Sustainable Stock Exchange Initiative and the Sustainable Business Council, NZX supports climate reporting and a climate-resilient future for New Zealand. However, New Zealand’s approach to CRD needs to be right sized and workable.

“With directors of Climate Reporting Entities (CREs) personally liable for a company’s emissions reporting – including criminal sanctions – this has tilted the purpose of the regime from driving climate action, capital allocation and addressing risk, to one too focused on compliance and mitigating risk to company board members.

“The effect has been to impose significant costs to listed companies in assurance, consultants and legal advice. This is money and effort that could be better spent on climate mitigation, transition and adaptation. Removing this liability will make a material difference.

“Alongside this, the reporting threshold of a market cap of $60 million for a listed company is too low and out of step internationally. Lifting that threshold to $1 billion will ensure New Zealand’s CRD regime is more closely aligned with that in Australia. Removing managed investment schemes from CRD is also pragmatic.

“Companies have told us the New Zealand CRD settings have been prohibitive to listing. Likewise listed companies have told NZX the settings, costs and requirements could lead to them delisting. That is why adjustments to CRD need to be made to balance transparency of reporting with listed companies ability to grow, invest, and create more and better paying jobs for New Zealanders.

“NZX wishes to acknowledge the Government and Commerce Minister Scott Simpson in particular, for listening to, and acting on, the concerns raised.”

Mr Beattie says NZX, and representatives of New Zealand’s capital markets sector, continue to engage with the Government on removing regulatory roadblocks that are hindering investment and access to capital for New Zealand companies and projects. This includes specific changes to disclosure documents, and tax reforms that would remove distortions and encourage greater investment. Today’s announcement follows on from the Government’s changes in June this year that made prospective financial information for initial public offers in disclosure documents optional.

In addition, NZX has initiatives underway to grow New Zealand’s capital markets. This includes partnering with BT Radianz to make connectivity to New Zealand’s markets easier for international participants and investors, launching a new anonymous mid-point trading venue – NZX Dark – in 2024, and the S&P/NZX20 Index Futures next year. A liquid equity derivatives market will help drive growth in the broader capital markets through additional cash market trading, participation and data revenues.

“As a package, all these capital market reforms and initiatives will materially improve the viability for companies wanting to meet their growth aspirations via the listed market,” Mr Beattie says.

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