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Climate-related accounting disclosure standards 'will help to drive capital towards activities that support the transition to a low-emissions future'

Public Policy / news
Climate-related accounting disclosure standards 'will help to drive capital towards activities that support the transition to a low-emissions future'

New Zealand's climate-related accounting disclosure standards, which aim to support the allocation of capital towards activities consistent with a transition to a low-emissions economy, have been published.

About 200 companies will adopt the standards from January.

Below is the announcement from the External Reporting Board (XRB), an independent Crown entity tasked with preparing and issuing accounting standards and audit assurance standards.

Landmark moment in New Zealand’s transition to a low-emissions future

Today, Michele Embling, Chair of the External Reporting Board (XRB), has announced that the Climate-related Disclosures standards have now been published.

Around 200 of New Zealand’s most economically significant entities will start reporting against the standards from 1 January 2023. Reporting on climate-related risks and opportunities is largely still in its infancy, but Ms Embling believes having formalised reporting standards will build momentum and catalyse change.

“By providing investors with the information they are increasingly demanding, such as a company’s greenhouse gas emissions, the reporting regime will help to drive capital towards activities that support the transition to a low-emissions future. It will also galvanize directors and management to start looking closely at their climate-related risks and opportunities and what strategies and plans they have in place to manage them.” Says Ms Embling

The reporting standards have been developed through three consultative iterations over the past 18 months according to the XRB’s Chief Executive, April Mackenzie.

“The level of active engagement on this work has been impressive. New Zealand organisations and individuals are clearly and rightfully very passionate about this topic. We are immensely grateful to everyone who got involved in this work and provided feedback—we couldn’t have done it without them.”

Ms Mackenzie says a number of changes to the draft standards have been made following the last round of consultation.

Find Aotearoa New Zealand Climate Standards here.

Summary of main changes to Aotearoa New Zealand Climate Standards following consultation

The following summarises the main changes the XRB Board made to the standards as a result of feedback received on the exposure drafts. Climate-related disclosures (NZ CS 1)

1. Moved the strategy disclosure on time horizons to the section on anticipated impacts and financial impacts— as disclosure is about time horizons for anticipated financial impacts

2. Replaced ‘financial planning processes’ with ‘internal capital deployment and funding decision-making processes’ to avoid conflicting with the typical use of the term by MIS Managers

3. Reworked the disclosure on targets aligned with science to provide greater clarity for entities. The new disclosure links with the scenario analysis requirement for a 1.5 degrees scenario and the Climate Change Response Act

4. Reinstated the greenhouse gas disclosure requirement for an entity to disclose the source of emission factors and the global warming potential rates used — in direct response to feedback that is useful information and acknowledging no imposition of additional work for an entity

Adoption of Aotearoa New Zealand Climate Standards (NZ CS 2)

1. Clarified that:

a) some adoption provisions may only be used when an entity enters the regime for the first time, but others (relating to comparatives for metrics and analysis of trends) can be used each time an entity enters the regime. ‘First-time’ was also removed from the title of the Standard

b) an entity making use of the one-year exemption for disclosure of scope 3 GHG emissions may apply this to either all its scope 3 GHG emissions sources, or a selected subset of its scope 3 GHG emissions sources

2. Added an adoption provision for comparatives for scope 3 GHG emissions

General requirements for climate-related disclosures (NZ CS 3)

1. Removed consistency from the presentation principles, revised consistency as an information principle, and moved balance from the information principles to the presentation principles

2. Removed the ability for an entity to cross refer to a website due to the practical limitations of meeting the legislative requirement to deliver climate statements to the Companies Office for lodgement on the relevant register

3. Amended the definition of material by deleting the link to ‘enterprise value’ so that the definition of material can be applied by a wider range of entities including public benefit entities and MIS Managers, and to better align with international and other domestic definitions. Also removed definition of, and other references to ‘enterprise value’

4. Clarified than an entity does not have to disclose comparatives for a new metric

5. Reworked the disclosures on methods and assumptions, and data and estimation uncertainty — added an explicit reference to data uncertainty

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A timely article Gareth, considering what is at stake (in particular the farming sector), thank you.

So, who wants to be first to report?

Key for me is what information do we need to collect as an organisation?

Secondly, how do we collect? Mechanical piece I know but needs some system capability.

Thirdly, does the reporting make sense? And what is reasonable? Knowing the vagaries of climate on horticulture and aquaculture, there will be good years and bad years and often several bad years in a row.

Good luck on this one New Zealand


The standards make for a thrilling read, and will be well received by those writing the gushy parts of annual reports.


Much ado about - minutae.

Given that carbon (and methane) are traceable to our frenetic energy use, this is a convoluted way of measuring what comes out of the exhaust-pipe. We should just ration fossil energy - which is starting to ration itself, anyway. Far easier to count at the pump (yes, even for food-production) than at the tail-pipe.

This is what you do when you are virtue-signalling, but not self-curtailing.

And being done on a sinking ship.

And requires extra complexity - at a time when we can afford less and less.