The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has published a report detailing its review of initial climate-related disclosures submitted by New Zealand’s climate reporting entities (CREs).
The insights aim to support entities in meeting regulatory requirements and enhancing the quality of climate-related information provided to stakeholders.
The report evaluated 70 climate statements from reporting periods ending between December 2023 and March 2024. These disclosures were assessed against the standards set by the External Reporting Board (XRB) under the Aotearoa New Zealand Climate Standards, as well as the obligations outlined in the Financial Markets Conduct Act 2013.
Jacco Moison, the FMA’s head of audit, financial reporting, and climate-related disclosures, acknowledged the work involved in submitting the first mandatory climate statements.
“Climate reporting entities have put in an enormous effort to ensure their first mandatory climate statements were prepared on time. We acknowledge that some have faced challenges, including obtaining reliable data, incurring higher-than expected costs, and deciding how to make disclosures in the absence of guidance on certain topics,” he said.
The FMA report identified several areas for improvement, providing guidance for future disclosures.
Some statements contained excessive detail, making it difficult for users to identify key information, while others omitted important required disclosures.
The FMA emphasised the need for CREs to focus on material information relevant to their unique circumstances and stakeholder needs.
In certain cases, disclosures appeared overly optimistic or lacked balance. Some entities provided incomplete or hard-to-understand information, which the FMA said needs to be addressed in future reports.
The FMA noted that many statements did not adequately explain how governance, risk management, and strategic processes were implemented or how they related to other business activities.
Entities were encouraged to include clear descriptions of these processes and their frequency.
Disclosures about methods, assumptions, and uncertainties – especially those related to scenario analysis and greenhouse gas (GHG) emissions – were often insufficient.
The FMA recommended more detailed reporting to provide transparency for stakeholders.
The FMA plans to maintain its educational approach to oversight, aiming to support CREs as they refine their disclosures.
Two webinars will be held in December to discuss the report’s findings, with additional engagements planned for 2025.
Future reviews will also focus on verifying that independent assurance practitioners’ reports meet the standards outlined in NZ SAE 1, which governs assurance over GHG emissions disclosures.
The FMA encouraged CREs to apply the feedback provided in this report to improve their climate-related statements in future reporting cycles.
As the reporting framework evolves, the FMA expects greater consistency, clarity, and alignment with the overarching goal of providing decision-useful climate information for stakeholders.
