New Zealand XRB releases final climate reporting paper

New Zealand's External Reporting Board (XRB) has released a final consultation paper on the mandatory Climate-related Disclosure standards that will come into force next year.

The New Zealand government last year passed legislation that made climate-related disclosures mandatory for around 200 of the country's largest entities. The reporting regime has been in development since then, aligned to the Taskforce on Climate-related Financial Disclosures (TCFD) reporting framework, which focuses on four pillars - governance, risk management, strategy, and metrics and targets.

The release of the consultation paper is "a significant milestone towards ensuring the effects of climate change are actively and routinely considered in business, investment, and lending decisions," said XRB chief executive April Mackenzie.

"Climate disclosures bring climate-related risks and opportunities front and centre so that entities are prompted to think about their strategy and business model and assess whether they can continue to create value in the long term, or whether they need to adapt," she said.

Investors and shareholders are increasingly demanding greater transparency through the disclosure of climate-related risks and opportunities, Mackenzie said.

"The disclosures are about transparency and trust," she said. "These sit at the heart of decision making-for investors and the entities themselves.

"Ultimately, it's about driving investment and capital away from high-emissions activities and towards low-emissions activities. We are confident the disclosure regime we've developed will support that transition."

The mandatory disclosure standards will apply to listed equity and debt issuers with a market capitalisation exceeding NZ $60 million and large financial organisations including banks, insurers and managers of investment schemes with total assets of more than NZ$1 billion.

The reporting regime will kick in after the XRB issues the first climate standard, which they anticipate will happen by December of this year.

There are currently 63 New Zealand companies listed on the ASX. There is no mandatory requirement for Australian companies to disclose climate risks, although material financial risks - including climate risk - are expected to be disclosed by companies.

Read more: New ZealandExternal Reporting Boardclimate-related disclosure standardsApril Mackenzie