- CA ANZ welcomes the announcement of plans to mandate climate-related financial disclosures for some organisations
- We support the XRB and the FMA being directly involved in the proposed regime
- Accountants will be able to help organisations make climate-related financial disclosures
Chartered Accountants Australia and New Zealand welcomes the New Zealand Government's plan to mandate climate-related financial disclosures for some organisations.
CA ANZ is a strong advocate for appropriate climate-related disclosures and reporting for decision making.
This is a world first but a sensible first step for New Zealand. Many jurisdictions are considering how they can implement mandatory climate-risk disclosures.
Under the proposals by Climate Change Minister James Shaw, the following entities would be required to produce disclosures (if they are over the thresholds on the last day of the two most recent financial years):
- All registered banks, credit unions, and building societies with total assets of more than NZ$1 billion.
- All managers of registered investment schemes with greater than NZ$1 billion in total assets under management.
- All licensed insurers with greater than NZ$1 billion in total assets under management or annual premium income greater than NZ$250 million.
- All equity and debt issuers listed on the NZX.
- Crown financial institutions with greater than NZ$1 billion in total assets under management.
The disclosure requirements are intended to be developed by the External Reporting Board (XRB) in alignment with the recommendations of the Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD). Non-disclosure will carry an obligation to explain why an organisation has not complied.
The Financial Markets Authority (FMA) will be responsible for independent monitoring, reporting and enforcement.
This announcement follows the consultation by the Ministry for the Environment and the Ministry of Business, Innovation and Employment (MBIE), and the focus groups hosted by CA ANZ, regarding the place for mandatory climate-related financial disclosures in New Zealand. CA ANZ also made a submission as part of this consultation process.
Karen McWilliams FCA, CA ANZ's Business Reform Leader, said Chartered Accountants ANZ was pleased that the XRB would be directly involved in developing the standards. "The use of the TCFD recommendations will provide a strong foundation for determining the climate-related financial disclosures needed to inform the market."
"Chartered Accountants ANZ looks forward to continuing to be a part of the climate change conversation as we acknowledge the economic and social risks and opportunities it presents will have long-reaching impacts on businesses and the community for generations to come,"The details of the standards the XRB will develop are critical to ensure they will be useful to investors and to avoid boilerplate responses.
"However, as we noted in our submission to the consultation, comprehensive education is absolutely critical to raise awareness and ensure the reporting entities fully understand their climate risks," McWilliams said.
"We also noted the importance of effective monitoring and enforcement, to ensure that appropriate reporting is carried out and we are pleased to see the FMA has been given this remit."
Across the Tasman, Chartered Accountants ANZ has also contributed to the development of climate-related financial disclosure guidelines as headed by the Climate Measurement Standards Initiative (CSMI) – an industry-led collaboration between insurers, banks, scientists, regulators, reporting standard professionals, service providers and supporting parties. Notably, these guidelines are recognised and endorsed by the Ministry for the Environment.
Accountants will be able to help organisations make climate-related financial disclosures in a way that meet the demands from investors for robust, reliable and comparable information for decision-making.
In doing so, businesses will be better placed to understand their risks and opportunities.
"Chartered Accountants ANZ looks forward to continuing to be a part of the climate change conversation as we acknowledge the economic and social risks and opportunities it presents will have long-reaching impacts on businesses and the community for generations to come," McWilliams said.
Mandatory climate-related financial disclosures
Ministry for the Environment - The Government plans to make climate-related financial disclosures mandatory for some organisations. The requirement would apply to publicly listed companies and large insurers, banks and investment managers.Read more
Climate Measurement Standards Initiative homepage
Developing open-source technical business and scientific standards for climate physical risk projections of future repair and replacement costs of residential and commercial buildings and infrastructure in Australia.Read more
CA ANZ submission on climate-related financial disclosures consultation in NZ
Climate-related financial disclosures – Understanding your business risks and opportunities related to climate change: Discussion documentRead more