Recent consultations from the Ministry of Business, Innovation and Employment (MBIE) and the Financial Markets Authority (FMA) have a particular focus area; Climate-related Disclosures (CRDs). 

The External Reporting Board’s (XRB) Aotearoa New Zealand Climate Standards became effective 1 January 2023. To coincide with this, CA ANZ Sustainability and Business Reform Leader, Karen McWilliams, released an opinion piece. Climate Standards 1, 2 and 3 will apply to listed companies with a market capitalisation or issued debt of more than $60 million, large registered banks, licensed insurers, credit unions, building societies, managers of investment schemes; and, some Crown financial institutions (via letters of expectation), and these entities are known as Climate Reporting Entities (CREs). 

In June and July 2023, four consultations impacting CREs were opened. The first, from MBIE, related to the regulations that will set the requirements for record-keeping and infringement fees. The aim of these regulations is to eliminate uncertainty for both the Climate Related Entities (CREs) and their regulator, the FMA. 

In our response to MBIE: 

• We questioned the need for Regulation 252A, noting that there is no equivalent for accounting records
• We recommended aligning Regulation 252B with section 457 of the FMC Act, to allow CRD records to be kept in any language (including Te Reo Māori) so long as they can be translated into English 
• We questioned the need for a two-year exemption to be granted for third party record keepers as we are concerned that this could lead to an unlevel playing field for CREs 
• We also suggested further consideration is required on the need to have a requirement prescribing where CRD records are to be kept 
• It is likely that holding CRD records offshore would have similar risks to holding accounting records offshore and so we suggested that, at a minimum, CRD records be allowed similar options

The remaining consultations were from the FMA. The first seeks feedback on proposed guidance and expectations for keeping proper CRD records and the other two consider potential exemptions for CREs; in liquidation, receivership, or voluntary administration and for disclosure timing challenges. CA ANZ is working on responses to these three consultations and welcomes any feedback you may have.

The first seeks feedback on proposed guidance and expectations for keeping proper CRD records.   In our response, we raise concerns about the timing of the multiple consultations recently released and the capacity for CREs to respond. We consider a basic knowledge base as necessary to interpret both financial and CRD records and do not consider the level of detail in the guidance as appropriate. We see this as overly detailed compared to the guidance provided for financial records.   

The remaining two consultations from the FMA consider potential exemptions for CREs; in liquidation, receivership, or voluntary administration and for disclosure timing challenges. We broadly agree with the proposed exemptions.

All three submissions are available in full as a related download below.

In July, the FMA also released this scenario analysis information sheet for CREs, which has not been through a consultation process.