In-scope financial institutions and listed companies will have to file their first climate statements from July 2024.
New Zealand’s Financial Markets Authority (FMA) has asked supervised entities to start preparing for the mandatory climate disclosure legislation expected to take full effect in 2023.
Last month, New Zealand became the first country in the world to pass climate disclosure legislation that will require financial institutions and listed companies to disclose and act on climate-related risks.
In a new article, the FMA’s Director of Capital Markets, Sarah Vrede, revealed that around 200 entities, or climate reporting entities (CREs), will be part of the new climate regime.
CREs will be required to prepare an annual climate statement that discloses information about the effects of climate change on their business or investments, and also prepare climate statements in accordance with climate standards issued by the independent External Reporting Board.
CREs will also be required to obtain independent assurance about the part of the climate statement that relates to the disclosure of greenhouse gas (GHG) emissions, make the climate statements available to the public, and comply with record-keeping requirements.
The new regulatory requirements will apply to New Zealand’s larger listed companies – both issuers of quoted equity securities and/or quoted debt securities. Equity issuers will be in scope if the market price of all its equity securities exceeds NZ$60 million. Debt issuers in scope are those who have quoted debt with face value exceeding NZ$60 million.
The FMA says it expects the first batch of climate statements to be filed from April 2024 onwards. Based on the current anticipated timeframe, any entity with a 31 March balance date will have to file its first climate statement by 31 July 2024.
To assist CREs in preparing for the new legislation, the FMA has published new guidance on its approach to implementing climate-related disclosures, setting out its expectations for CREs.
The FMA said its primary focus as the regulator of the climate reporting regime will be on supporting the development of good practice and enforcement action focusing on serious misconduct, including failures to produce climate statements and the issuance of statements that are misleading or false.
“While there is time to develop good practice and prepare for the first statements from 2024, we’re encouraging entities to start preparing for the new regime as soon as possible,” Vrede wrote.
“This means finding the right people and business partners to help you understand the requirements and prepare your disclosures and getting your systems ready to ensure climate-related records can be properly captured and maintained.”