The New Zealand government has opened a consultation process to review its climate-related disclosure (CRD) regime, seeking public input on potential changes.
The Ministry of Business, Innovation, and Employment (MBIE) has invited feedback on proposals to amend reporting thresholds, revise director liability rules, and address other challenges identified during the first year of mandatory reporting.
Introduced in 2021, the CRD regime requires climate reporting entities (CREs) to produce annual climate statements following standards developed by the External Reporting Board (XRB).
Reporting entities include listed companies, insurers, banks, credit unions, and certain fund managers that exceed size thresholds defined in the Financial Markets Conduct Act 2013.
Compliance is monitored by the Financial Markets Authority (FMA), which recently released a report on the first set of climate disclosures submitted by CREs, identifying key areas for improvement.
The first climate statements, submitted between December 2023 and March 2024, revealed several operational issues.
The government is assessing three key areas for potential amendments.
Proposals include raising thresholds for listed issuers and investment scheme managers, which could reduce the number of entities required to report.
Adjustments are being considered to limit, but not entirely remove, directors’ liability for reported information in climate statements.
Officials are exploring whether subsidiaries of global corporations could submit their parent companies’ climate reports in New Zealand.
The proposals aim to address concerns that New Zealand’s current thresholds and liability settings are less competitive than those of Australia.
Stakeholders have expressed concerns about the cost and complexity of compliance. Some entities believe that the financial burden is disproportionate to the benefits, with excessive focus on meeting regulatory requirements rather than taking substantive climate action. Others view the regime as a deterrent to listing on the New Zealand Exchange (NZX).
Minister of Commerce and Consumer Affairs Andrew Bayly acknowledged these concerns, noting that the regime’s implementation had exposed several challenges.
“Stakeholders are telling me that the reporting thresholds are too low, the cost of producing climate statements is excessive and the director liability settings are not suitable for the nature of climate reporting. The regime settings are also creating a disincentive to list on the NZX and are hampering the efficient operation of New Zealand businesses,” he said.
He added that aligning New Zealand’s standards with international practices, including Australia’s framework, could reduce barriers for businesses while maintaining regulatory objectives.
“New Zealand was among the first countries in the world to introduce climate reporting but now that Australia has its own regime, I think we should be better aligned,” Bayly said.
MBIE’s discussion document outlines proposed changes and invites stakeholders to share their perspectives.
Specific feedback is sought on whether the government has correctly identified the issues and whether the suggested adjustments will address them effectively.
The consultation also asks stakeholders to consider the broader implications of the proposed changes on business operations, compliance costs, and the financial markets.
Submissions will close on Feb. 14.
