Changes ensure that 'right entities' are reporting amid cost concerns for businesses
The New Zealand government will ease climate reporting rules to cover only large listed firms amid business concerns about compliance costs.
Commerce and Consumer Affairs Minister Scott Simpson announced only NZX-listed companies worth $1 billion will be required to publish annual reports on the impact of climate change on their businesses and their efforts to reduce emissions.
This is a higher threshold for the requirement that currently covers listed firms with a market value of $60 million or more, putting about 170 large companies, banks, investment managers, and insurers under mandatory climate reporting.
Additionally, director and company liability settings will also be adjusted to reduce unnecessary risk and cost while preserving climate disclosures. Managed investment schemes will be removed from the climate reporting regime as well.
The changes will be passed as part of the Financial Markets Conduct Amendment Bill, according to the New Zealand government.
'Onerous' climate reporting rules
Simpson said the change comes after concerns mounted on the heavy costs imposed by mandatory climate reporting on businesses.
"Some entities tell me they have spent up to $2 million on compliance, money they would rather invest in practical emissions reductions such as electric vehicles," Simpson said in a statement.
New Zealand was the first country in the world to require large financial institutions and listed companies to publish annual climate-related disclosures, following the introduction of the rule by the previous government.
"While the intentions were solid, the rules proved too onerous and have become a deterrent for potential listers," Simpson said.
According to the minister, 34 companies have listed on the NZX since 2020, including six IPOs, while 37 have delisted.
"To future-proof our markets, we need to ensure listing remains an attractive option for raising capital in New Zealand," he stated.
Consultation was held earlier this year on climate reporting changes, as Simpson said it "made sense" to review the policy after the first year of reporting.
"We have listened to the feedback, examined how the regime operates in practice, and are now resetting the settings accordingly," he said.
"Together, these changes will ensure the right entities are reporting, the regime is not making it harder for Kiwi firms to do business, and the information produced remains robust and useful."
