The Financial Markets Authority (FMA) - Te Mana Tātai Hokohoko acknowledges the passage of the third reading of the
Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill.
The new legislation will require certain entities, to be known as Climate Reporting Entities (CREs), to produce annual
climate statements that identify and report on the impact of climate change on their organisations and disclose
greenhouse gas emissions.
The intent of the climate-related disclosure (CRD) regime is to ensure that the effects of climate change are routinely
considered in CRE’s business, investment, lending and insurance underwriting decisions.
The FMA will be responsible for monitoring and enforcing the new regime.Next steps in the implementation of the regime
The CRD legislation also tasks the External Reporting Board (XRB) with responsibility for developing climate reporting standards for the new regime. The standards will be based on the
recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The XRB is now consulting on Climate-related Disclosures - Governance and Risk Management.
Climate statements will be required to be produced by a CRE for annual reporting periods that commence on, or after, the
date the XRB issues the first relevant climate standard. The XRB is currently expecting to issue the first climate
standard by December 2022, which means climate statements will be required to be produced by CREs from early 2024 (at
the earliest), for annual reporting periods starting on or after 1 January 2023.Next steps for the FMA
The FMA plans to issue high level guidance for CREs on compliance expectations by December 2022 and provide more
detailed guidance throughout calendar year 2023.
Sarah Vrede, FMA Director of Capital Markets, said: “We welcome the new legislation which establishes a mandatory
disclosure regime that requires significant financial sector entities to identify and report on the impact of climate
change on their organisations.”
“Our initial regulatory approach will be focused on supporting climate reporting entities and other relevant
stakeholders as they prepare for the new regime. For the next few years, we will have a strong focus on supporting and
encouraging development of good practice. In the early stages of the new regime, enforcement action is likely to be
focused only on serious misconduct, such as failure to produce climate statements or where climate statements are false
or misleading.”
The CRD regime will capture around 200 entities, comprising:Large, listed issuers of quoted equity securities or quoted debt securities (over $60 million in market capitalisation
or quoted debt, respectively. Issuers listed on growth markets are excluded);Registered banks, credit unions and building societies with total assets over $1 billion;Licensed insurers with total assets over $1 billion or annual gross premium revenue over $250m; andManagers of registered schemes, such as Kiwisaver schemes and investment funds, (other than restricted schemes) with
greater than $1 billion in total assets under management
The Ministry of Business, Innovation and Employment (MBIE) and the FMA are currently consulting with levy payers on two
potential funding options for the FMA’s new CRD regime responsibilities. Consultation closes on 7 November 2021.