Adjustments to the Climate-Related Disclosures Regime
The Ministry of Business, Innovation and Employment (MBIE) is consulting on new changes to New Zealand's climate-related disclosures regime as part of broader capital markets reforms. In particular, the Government seeks to reduce the number of entities captured and relieve directors of personal liability to reduce compliance costs and encourage listings.
From early 2026, the headline changes would see the listed issuer threshold lifted from NZD60m to NZD550m and the fund managers' threshold lifted from NZD1 billion AUM to NZD5 billion AUM.
Key problems identified
The Government is concerned that the current thresholds for listed issuers and fund managers are too low, leading to a disproportionate burden of compliance costs given the size of the reporting entities.
With potential personal liability for directors, some are concerned that the current regime discourages detailed and useful disclosures due to caution around inherently qualitative and uncertain requirements.
This compliance cost is considered to be out of step with the Australian regime and a further disincentive for listing on the NZX.
Key proposed changes
Proposed reporting thresholds for issuers
|
Option |
Change to threshold |
Number of listed issuers impacted |
MBIE considerations |
|---|---|---|---|
| Option 1 | No change to threshold – threshold of NZD60 million in market capitalisation | 107 listed issuers required to report |
XRB may be able to alleviate some of the reporting pressures for listed issuers by issuing new standards for smaller listed issuers. The XRB intends to consult on the establishment of a differential reporting strategy for climate-related disclosures in 2025. |
| Option 2 | From early 2026, the threshold would increase from NZD60 million to NZD550 million in market capitalisation | 54 listed issuers required to report | Option likely to reduce the risk of regulatory arbitrage. |
| Option 3 |
Staged reporting:
|
81 listed issuers required to report |
The “stop start” approach may have downsides for climate reporting entities and users of the reports. It may be costly for climate reporting entities to pause and then re-start reporting, and it may be confusing for users of the reports if there is a gap in reporting. Option better aligned with Australia's reporting requirements |
Proposed reporting thresholds for fund managers
|
Option |
Change to threshold |
Number of fund managers impacted |
MBIE considerations |
|---|---|---|---|
| Option 1 |
No change from the current NZD1 billion total assets under management1 threshold. |
23 managers are currently required to report. 119 schemes are captured. 956 funds are covered, with a total value of NZD185 billion. |
|
| Option 2 | The threshold would increase to NZD5 billion total assets under management, calculated per manager. |
12 managers would be required to report. 56 schemes would be captured. 690 funds would be covered, with a total value of NZD150 billion. |
Under both Option 2 and 3:
|
| Option 3 | The threshold would increase to NZD5 billion per individual scheme, rather than the total assets under management across all schemes managed by a particular manager. |
9 managers would be required to report. 10 schemes would be captured. 136 funds would be covered, with a total value of NZD90 billion. |
Revising director liability settings
|
Option |
Change to liability |
MBIE considerations |
|---|---|---|
| Option 1 |
No changes to the current liability settings. |
|
| Option 2 | Amend the Financial Markets Conduct (FMC) Act to remove deemed liability for directors under section 534. This means directors would not automatically be liable if a climate reporting entity fails to comply with climate standards. |
Removing deemed liability would not affect the CRE's potential liability. It also does not affect the civil liability of a director actively involved in the CRE's contravention. Options 2 and 3 would eliminate automatic liability for directors, encouraging more comprehensive climate disclosures. Option 3 would provide additional protection by ensuring directors are not liable for aiding and abetting unsubstantiated representations. If Option 3 were adopted, directors would still have potential liability for misleading and deceptive conduct (civil and criminal breaches), involvement in a breach of a climate-related disclosures provision (obligation to prepare climate statements in accordance with standards, lodge climate statements, keep proper records and obtain assurance) and criminal offences. |
| Option 3 |
Amend the FMC Act to remove deemed liability for directors under section 534. Additionally, amend the FMC Act to ensure directors cannot be held liable for aiding and abetting unsubstantiated representations under section 23. |
|
| Option 4 | Introduce a temporary safe harbour provision, or modified liability provision to protect climate reporting entities and their directors from civil liability. |
A safe harbour provision offers directors temporary protection, particularly for challenging disclosures like Scope 3 emissions, scenario analysis, and transition plans. This provides directors more confidence in making disclosures and allow time to adjust to the regime. |
Encouraging reporting by subsidiaries of multinational companies
Finally, MBIE is considering proposals to encourage New Zealand subsidiaries to voluntarily file their parent company climate statements in New Zealand.
Next steps
Stakeholders are invited to provide feedback on the proposed changes by 17:00, 14 February 2025.
The feedback received will be reviewed and used to inform recommendations to the Minister of Commerce and Consumer Affairs. Based on this feedback, amendment legislation may be introduced in 2025, with potential changes taking effect in 2026. Ongoing consultation with stakeholders will continue to refine the proposals, ensuring they meet the objectives of promoting a low-emissions economy, maintaining the competitiveness of New Zealand’s capital markets, and encouraging robust and useful climate-related reporting.
1 Total assets under management refer to total assets under management in registered schemes.
