New Zealand’s mandatory climate reporting framework will apply to fewer than half its original participants once pending legislative changes take effect – a contraction that the Ministry of Business, Innovation and Employment (MBIE) warned could damage the regime’s long-term effectiveness, even as the government proceeded with a further round of exemptions.
Nine health and life insurers will be removed from the climate-related disclosures (CRD) regime. Combined with 88 businesses already removed through earlier decisions, around 67 entities will be required to report once the updates are in place, down from 164 originally. The move was made over the documented objection of MBIE officials, who recommended the status quo be maintained, according to a Regulatory Impact Statement released by the ministry.
Among the insurers previously subject to the CRD, AIA New Zealand and Partners Life integrated their second-year climate statements into their broader annual reports rather than publishing standalone reports, according to a July 2025 analysis by MinterEllisonRuddWatts. As of mid-July 2025, six of the 16 licensed insurance climate reporting entities had submitted their second-year statements, with the remaining entities expected to lodge by the Jan. 30, 2026, deadline.
In the Regulatory Impact Statement, MBIE officials said their preferred option was to retain health and life insurers within the CRD. Their position was grounded not in direct climate exposure, but in the systemic role these entities play in New Zealand’s financial markets. “Their business models involve long-term risk pricing, capital allocation, and investment decisions, all of which are relevant to how climate-related risks and opportunities are assessed and managed within the financial system. Entities are included because of their role as large financial market participants that influence capital flows and long-term financial outcomes. Adjusting scope on the basis that a particular sub-group has more limited direct climate exposure would therefore depart from the regime’s foundational design and risk reframing its purpose in a way not previously applied to other reporting entities,” officials said.
Officials said their recommendation reflected “the absence of evidence that current reporting costs are disproportionate to the benefits of disclosure.” Commerce and Consumer Affairs Minister Cameron Brewer proceeded regardless, citing a structural distinction between health and life insurance and general insurance. “Unlike general insurers, health and life insurers aren’t directly exposed to climate risks like extreme weather events, so there’s little value in making them report on it. They’ve told us they don’t belong in the climate reporting regime, as ultimately it adds cost to their clients. This is a commonsense fix. It’s about making sure the right businesses are reporting, not tying up firms in paperwork that does nothing for anyone,” he said.
The Financial Services Council (FSC) supported the decision. FSC chief executive Kirk Hope said the sector had been carrying compliance costs of between $10 million and $15 million annually without demonstrable customer benefit. “Health and life insurers do not insure homes, farms, or roads against floods and storms. They protect people when they get sick, can’t work, or when their family needs support. The previous regulations treated very different risks as if they were the same,” Hope said.
MBIE estimated per-insurer savings from the exemption at between $261,500 and $600,000, but concluded this was insufficient grounds for removal. “While there may be some compliance relief for the entities excluded, we do not think there is evidence that the costs of compliance outweigh the intended benefits of the regime, whilst also acknowledging the regime has not been in place long enough to have evidence that it’s meeting its objectives,” the Regulatory Impact Statement stated.
The integrity concern in MBIE’s analysis carries direct implications for the general insurers, banks, and listed entities remaining inside the regime. Officials flagged uncertainty about the cumulative effect of overlapping scope reductions – the listed issuer threshold rise, the managed investment scheme removal, and the health and life insurer carve-out – noting the CRD had not been in operation long enough to determine whether it was achieving its objectives.
“Further reducing the number of climate-reporting entities risks weakening the overall integrity and effectiveness of the CRD regime, which relies on maintaining a sufficient volume of disclosures to support comparability, market confidence, and robust assessment of climate-related risks and opportunities,” the Regulatory Impact Statement stated. Officials added that further reductions "could erode confidence in the regime as a whole and limit its ability to achieve its intended system-level objectives."
The legislative vehicle – the Financial Markets Conduct Amendment Bill – began its second reading on Feb. 10, 2026, but debate was interrupted and later resumed on April 2. The bill remains before Parliament, with its second reading yet to be completed. Because the timeline is uncertain, the Financial Markets Authority (FMA) issued interim “no action” relief beginning June 19, 2026, meaning entities with March 31, 2026, balance dates onwards are not required to lodge climate statements. FMA general counsel Liam Mason said: “We recognise that many life and health insurers will be impacted by the uncertain timeframe in which the amending legislation might be passed. This approach will avoid unnecessary compliance costs and promote the development of fair, efficient, and transparent financial markets.” If the changes are not legislated before insurers are due to begin preparing statements for the 2026/2027 period, the FMA has indicated it will revisit the no-action position.
General insurers are not affected by the exemption and retain their reporting obligations. Once all amendments are enacted, the CRD will apply to listed issuers with market capitalisation above $1 billion and to registered banks, credit unions, building societies, and general insurers holding assets of more than $1 billion. For those entities, the FMA’s 2026 Climate-related Disclosures Insights Report – which reviews 62 climate statements from the second year of disclosures – notes encouraging progress but identifies areas for improvement to support more informed decision-making. The FMA found that while governance and greenhouse gas reporting had improved, many entities had not adequately explained how specific climate hazards translate into financial risk for their operations.
The trajectory of New Zealand’s regime stands in contrast to Australia’s. According to the Australian Securities and Investments Commission (ASIC), more than 6,000 entities will be required to file climate-related disclosures under AASB S2 by 2030. Critically, Australia’s framework applies by size threshold under the Corporations Act – not by insurance category – meaning large life and health insurers operating in Australia that meet the relevant thresholds face mandatory reporting obligations from which their New Zealand counterparts are now being exempted.
Australia's regime is considerably broader than New Zealand’s because reporting obligations apply primarily according to legislated size thresholds rather than being limited to specific sectors. Group 1 entities began reporting for financial years commencing on or after January 1, 2025, followed by Group 2 from July 1, 2026, and Group 3 from July 1, 2027. For trans-Tasman insurers, this creates a compliance asymmetry: different entities within the same corporate group may be required to report in Australia while comparable New Zealand entities are exempt. The XRB has indicated it plans to consult in 2026 on aligning New Zealand’s NZ CS standards more closely with IFRS S2, with updated standards targeted for 2027. However, any convergence in reporting standards is separate from the legislative question of which entities are required to report.
