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New Zealand taking the stronger approach to climate-related financial reporting

Wednesday 11 May 2022


New Zealand is strengthening its approach climate change related disclosures. 

This week the Reserve Bank of New Zealand (RBNZ) is ‘strongly supporting’  the External Reporting Board (XRB) plans to build a tool to help understand and mitigate climate-related financial risks.

Assistant Governor/General Manager Strategy, Governance and Sustainability Simone Robbers said in an official statement this week, “As mandated in our legislation, protecting and promoting the stability of New Zealand’s financial system is one of our objectives. Climate-related risks will have a significant effect on New Zealand’s economy and financial system, therefore we are a strong supporter of XRB’s work in implementing climate-related disclosures.”

Just few months earlier the XRB began consultation on a standard for climate-related disclosures.    

 
International standard for  Financial Reporting

International Organisations of Securities Commission (IOSCO) Chair Ashely Adler said in an official statement in March,  “Our work plan for 2022 is very ambitious but it is of utmost importance that the regulatory community steps up its efforts in ensuring markets contribute positively to sustainability challenges, in a way that secures the integrity of financial markets and the protection of investors.”

The International Sustainability Standards Board (ISSB) published an exposure draft for International Financial Reporting Standards (IFRS)  General Requirements for Disclosure of Sustainability-related Financial Information which will be open for comment until July for this year. 
 

More International Standards

Last year saw the publication of the ISO 14097:2021.
 
According to the International Standards Organisation website  the standard provides for a range of reporting activities related to climate change:
 
  • the alignment (or lack thereof) of investment and financing decisions taken by the financier with low-carbon transition pathways, adaptation pathways, and climate goals;
  • the impact of actions through the financier’s investment and lending decisions towards the achievement of climate goals in the real economy, i.e. mitigation (greenhouse gas emissions) and adaptation (resilience)
  • the risks to owners of financial assets (e.g. private equities, listed stocks, bonds, loans) arising from climate change.
  • To support the financier’s assessment of the impact of investment and lending decisions, this document provides guidance for the financier on how to:
  • set targets and determine metrics to be used for tracking progress related to the low-carbon transition pathways of investees;
  • determine low-carbon transition and adaptation trajectories of investees;
  • document the causality or linkage between its climate action and its outputs, outcomes and impacts.
 
Robbers said, “Our goal is to see entities manage their own climate-related risks in a transparent manner that ensures these risks and opportunities are incorporated into business decisions and long-term strategies.”

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