New Zealand’s mandatory climate reporting framework is in its second year, and the Financial Markets Authority (FMA) says the results are mixed – entities are filing better-structured reports, but many are still not providing the level of physical risk analysis that regulators and investors need to make informed decisions.
The FMA released its 2026 Climate-related Disclosures Insights Report on May 26, drawing on 62 climate statements filed by climate reporting entities (CREs) under the country’s mandatory regime. The review covers the second annual cycle of disclosures and offers a snapshot of where the reporting population stands as compliance moves past the initial rollout phase. On the positive side, the FMA noted that more entities are disclosing greenhouse gas emissions data, and that governance and risk management sections of climate statements have become more clearly written. The regulator said these trends reflect a sector that is becoming more familiar with the requirements.
But familiarity with the format has not always translated into substantive content. The FMA’s central finding is that physical risk disclosures – those dealing with the direct consequences of climate hazards on assets, operations, and business activities – remain underdeveloped across much of the reporting population. Many entities are still producing broad, general statements rather than specific assessments tied to their actual exposure.
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Jenika Phipps, manager of climate-related disclosures at the FMA, said the issue is not that entities are ignoring physical risks, but that the analysis behind their disclosures often lacks the depth needed to be useful. “Consideration of climate-related risks, particularly physical risks, remains important given climate change is already affecting New Zealand through more frequent and severe weather events. This may translate into financial impacts through effects on assets and operations or indirectly through impacts on customers, supply chains, or insurance availability,” Phipps said.
That last point carries particular weight for insurance professionals. When physical climate risks are not properly identified and disclosed, the downstream effects – including gaps in insurance coverage, changes in underwriting terms, and the withdrawal of cover from high-risk areas – may not be reflected in the financial planning or risk management of the entities concerned. The FMA is signalling that insurance availability is not a background consideration but a material business risk that belongs in climate statements. The regulator also noted a disconnect between the risks entities identify and the actions they take in response. Many transition plans do not clearly show how targets and initiatives address the specific risks described elsewhere in the same disclosure. This limits the usefulness of climate statements for the primary users the regime is designed to serve: investors, lenders, and insurers.
The FMA’s report sets out five areas where it expects to see stronger performance in future disclosure cycles. The first concerns physical risk specificity. Entities need to explain not just that climate hazards exist, but which of their assets, operations, or activities are exposed, and why. The second relates to data quality. Physical risk assessments need to draw on appropriate data sources so that the resulting disclosures neither overstate nor understate actual exposure.
Third, entities need to be clearer about anticipated impacts – what actually happens to the business if a given risk materialises – and distinguish those impacts from the risks themselves. Fourth, there needs to be a visible link between identified risks and the targets or actions included in transition plans or an explanation of why no such response exists. Fifth, greenhouse gas assurance disclosures need to meet applicable standards and clearly communicate what has and has not been independently verified.
“Our expectations for further progress are not intended to increase the volume or complexity of disclosures, but that CREs refine their approach to focus on information that is most relevant to primary users. This includes improving quality by ensuring appropriate data is used, enabling entities to move beyond general statements and provide clearer explanations of the material climate risks they face, how those risks arise, and the potential impacts on their business,” Phipps said. The FMA said its monitoring approach would remain educative and constructive, supported by direct engagement with entities and additional guidance on physical risk disclosure.
The FMA report comes as the government moves to alter how climate-related harm can be pursued through the courts. In May, Justice Minister Paul Goldsmith announced plans to amend the Climate Change Response Act 2002 to prevent private civil claims against companies for harm linked to greenhouse gas emissions, according to Reuters. The amendment would apply to current and future proceedings, including a High Court case brought by climate activist Michael Smith against six major emitters, including Fonterra, which had been scheduled for trial next year.
Goldsmith said tort law was not the appropriate mechanism for resolving climate harm. “The courts are not the right place to resolve claims of harm from climate change,” he said, adding that such matters should be addressed through Parliament, the Emissions Trading Scheme, and existing climate legislation. International litigation group ClientEarth said the proposal was “deeply concerning,” arguing that people must be able to test climate obligations in court and that restricting that access undermines justice, environmental protection, and the rule of law.
The two developments pull in different directions. The litigation shield may reduce certain liability exposures for large emitters, but the FMA’s disclosure expectations are moving the other way – pushing entities toward more granular, evidence-based reporting on the physical and financial risks that climate change poses to their operations. Those risks, the regulator made clear, include what happens when insurance is no longer available or affordable.
