20 October 2021
First ever Climate Change-related disclosure consultation begins
The External Reporting Board (XRB) today began consultation with business on the first part of the Government’s proposed climate-related disclosure standards.
“Ultimately, this will be about making sure the impacts of climate change are actively considered by boards and management so that smarter business and investment decisions can be made, and entities demonstrate accountability and foresight in relation to climate issues,” says Chief Executive April Mackenzie.
Development of these standards follows the announcement in 2020 to introduce a mandatory reporting regime for key New Zealand companies including large, listed issuers and financial sector entities.
“These standards will put Aotearoa New Zealand up with the global best - building on the four areas developed by the international Task Force on Climate-related Financial Disclosures (TCFD).
“Together Governance, Risk Management, Strategy, and Metrics and Targets sections make up the Climate-related disclosure standards, and we’re kicking off the process with consultation on the Governance and Risk Management areas.”
The decision to focus first on Governance and Risk Management has been deliberate, says Mackenzie.
“For affected entities these areas should be straightforward to implement, whereas the Strategy, and Metrics and Targets sections are more complex areas that will require many entities to capture new information and implement new processes. We’re currently working through what that could look like before launching the next draft sections in March next year,” added Mackenzie.
Governance disclosures specify what entities need to disclose regarding board oversight and management assessment of climate-related risks and opportunities, while Risk Management disclosures are about the processes an entity uses to identify, assess, and manage climate-related risks, and how these are integrated into an entity’s overall risk management processes.
Consultation closes 22 November.