Climate-related Disclosures

The External Reporting Board (XRB) is proud to have played its part in addressing climate change through the establishment of a climate-related disclosures framework for Aotearoa New Zealand and we have now published the final standards.

Previous consultation documents, exposure drafts and supporting documents can be found on our consultation page.

Consultation

Throughout the development of the disclosure standards, we committed to taking a collaborative, open and transparent approach. We received 189 formal submissions plus informal feedback through direct engagement. This input has provided us with valuable insights into the needs and concerns of climate related reporting entities (CREs). The deep dive sessions we ran has also informed the development of the standards, FAQs and staff guidance. 

Click here for past presentations and documents related to our previous consultation rounds.

 

Background

In September 2020, the Government announced its intention to implement mandatory reporting on climate risks and tasked the XRB with developing reporting standards to support the new reporting regime.

In October 2021, the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill was passed and received Royal Assent. As a result, the XRB had a mandate to issue climate standards as part of a climate-related disclosures framework, and guidance on non-financial matters.

Task Force on Climate-related Disclosures (TCFD)

The TCFD was created in 2015 by the Financial Stability Board to develop consistent climate-related financial risk disclosures for use by companies, banks, and investors in providing information to stakeholders.

The TCFD produced recommendations in 2017 that outline a framework for reporting climate-related information. To date, this has been the leading guidance on climate reporting and has received widespread support globally. Multiple countries are considering its recommendations, including Australia, Canada, the EU, and the United Kingdom.

The TCFD recommendations incorporate four key themes: governance, strategy, risk management, and metrics and targets. Under each theme, 11 disclosures
are recommended.

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The TCFD has also produced general and sector-specific guidance on implementing its recommendations and will continue to develop further guidance. 

FAQs 

Climate-related disclosures are mandatory for large listed companies (large meaning with a market capitalisation of more than $60 million); large registered banks, licensed insurers, credit unions, building societies, and managers of investment schemes (large meaning with more than $1 billion in assets).

Some Crown financial institutions (via letters of expectation) are also expected to report.

The mandatory reporting regime takes effect for accounting periods that start on or after the 1 January 2023. This means that entities will be required to disclose according to the standard for accounting periods that start on or after 1 January 2023. For example:

  • A reporting entity with a 31 December balance date (i.e., reporting period 1 January to 31 December), would be required to prepare their first climate statement as part of their 31 December 2023 reporting.
  • A reporting entity with a 30 June balance date (i.e. reporting period 1 July to 30 June), would be required to prepare their first climate statement as part of their 30 June 2024 reporting. 

The Financial Markets Authority (FMA) are responsible for monitoring, regulation and enforcement. 

We are keeping a close eye on international developments in climate disclosures, such as the work coming out of the International Sustainability Standards Board, on its development of IFRS S2 climate-related disclosures.

It is a fast-evolving space and we will continue to monitor international developments.

You do not need to wait for the standards to get started on your climate reporting journey. Have a look at our page on Getting started on climate risk reporting for some tips.

Project Governance & External Advisory Panel 

An internal Project Steering Group provided governance and oversight, chaired by XRB Board member Jacqueline Cheyne. 

An External Advisory Panel acted as a consultation group on technical climate and sustainability issues, particularly those relating to the practical application and implementation of the standard. The panel included the following members: 

Annabell Chartres (PwC), Alison Howard (Wellington City Council), Adrian McDonald (University of Canterbury), Darren Beatty (Te Rūnanga o Ngāi Tahu Group), Karl Hickey (ANZ Bank Ltd), Belinda Storey (Climate Sigma), Dale Scott (Onepointfive Ltd), and Jonathan Keate (Office of the Auditor-General). 

Standards