Anticipated financial impacts

The XRB has released draft staff guidance to support climate reporting entities (CREs) to identify climate-related risks and opportunities, assess anticipated impacts, and quantify anticipated financial impacts (AFIs).

Our stakeholders told us they want practical support with AFI quantification. As meaningful quantification of AFIs depends on understanding climate-related risks, opportunities and anticipated impacts, this draft guidance includes a broader analytical process from identifying climate-related risks and opportunities all the way to quantifying their associated AFIs.

This approach is intended to help CREs strengthen and refine existing processes, rather than replace them or require work to be repeated.

The guidance is non-binding and provides a practical and flexible approach that CREs may choose to use, adapt, or draw from depending on their particular circumstances. It does not create new requirements, amend the climate standards, prescribe methodologies, or determine what entities should disclose.

CREs may use the entire guidance or focus on the parts most relevant to their needs.

The guidance has been released in draft form to seek feedback on its usefulness, clarity and practical application.

In particular, the XRB is interested in feedback on:

the interaction between the approach and scenario analysis
the usefulness of the examples provided
whether the approach is sufficiently practical, proportionate and flexible to be integrated into existing enterprise risk management and related business processes
areas where further clarification or additional examples may be helpful.

Please contact us at sustainability@xrb.govt.nz with any feedback.

Next steps

The XRB expects to publish a final version of the guidance, updated to reflect any wider stakeholder feedback received, by the end of this year.

While the guidance reflects Aotearoa New Zealand Climate Standards as the current reporting requirements, it focuses predominantly on the underlying analytical approach rather than disclosure. Any change in reporting standard in New Zealand relating to climate-related disclosures will result in this guidance being updated as relevant.

Standards