Home / Regulatory & Government / NZ regulator sets out climate disclosure implementation approach
22 November 2021
New Zealand’s Financial Markets Authority (FMA) has outlined how it intends to enforce and monitor mandatory disclosures of climate-related risks.
The country passed laws last month requiring financial institutions to provide information about the potential effects of global warming on their business, becoming the first jurisdiction globally to do so.
Under the new legislation, certain financial services providers known as Climate Reporting Entities (CREs) must produce annual statements that identify and report on the impact of climate change on their organisations and disclose their greenhouse gas emissions.
The FMA implementation approach released last week says licensed insurers with total assets of over $NZ1 billion ($968 million) or annual gross premium revenue in excess of $NZ250 million ($242 million) will qualify as CREs under the Climate-related Disclosures Regime (CDR).
The CRD regime will capture about 200 entities including banks, credit unions and building societies.
FMA says its four-stage implementation approach to the regime will evolve over the next four years, through to 2025/26.
In the first stage, it will issue early high-level guidance on compliance expectations to support the market by December next year, followed by setting of initial compliance expectations to facilitate the likely lodgement of first climate statements in early 2024.
The third phase relates to supporting development of best practice compliance and the final step will see the FMA looking to settle into its “steady state” level of monitoring.
“We are very conscious that New Zealand is the first country in the world to mandate implementation to require climate-related disclosures set by its standard-setting body,” FMA Director of Capital Markets Sarah Vrede said.
“Our primary focus as regulator of this regime, will be on supporting the development of good practice and – at least initially – enforcement action will focus on only serious misconduct.
“This would include failure to produce climate statements or where statements are misleading or false.”
Click here for the FMA implementation approach.