MR No. 2023 – 23
The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – has published three documents to support Climate Reporting Entities (CREs) in meeting their obligations under the new Climate Related Disclosure (CRD) reporting requirements.
The purpose of climate standards, as set out in the Financial Reporting Act*, are to provide for, or promote, climate-related disclosures, to:
By providing investors and other stakeholders with publicly available climate-related disclosures that can be relied on, the market will be able to make more informed decisions around where to allocate capital and contribute to the overall aim of the Aotearoa New Zealand Climate standards framework – ‘supporting the allocation of capital towards activities that are consistent with a transition to a low-emissions, climate-resilient future’.
The full set of documents the FMA has released are:
The proposed guidance for keeping proper climate-related disclosure records, published for consultation today, will provide practical examples and guidance, for CREs to meet their record keeping requirements under the regime. The regime will require 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 record keeping guidance for CREs explains how the FMA will apply the law and describes the principles underlying the FMA’s approach.
The proposed guidance is organised along the “four pillars” underpinning the requirements each business must report itself against:
Jenika Phipps, FMA Manager, Climate Related Disclosure, said: “For climate statements to be relied upon to achieve the purpose of the climate-related disclosures regime they must be supported by proper records. Records support the accuracy and legitimacy of climate statements, including substantiating how the CRD framework has been applied.
“Proper records help Climate Related Entities and their directors demonstrate compliance with their legislative duties and obligations. We also accept that this reporting regime is new, and the market’s ability to manage data sources and systems for collecting and reporting on climate-related information will improve over time.”
The monitoring approach and plan outlines the FMA’s oversight approach for the first three years of the regime. The first year will focus on setting initial compliance expectations, the second year will aim to support development of best practice and the third year will aim to be a steady state of guidance, monitoring and enforcement.
The third-party information sheet provides guidance to CREs that are considering engaging a third-party provider to deliver services in relation to its Climate Statement.
The proposed guidance for keeping proper climate-related disclosure records is open for consultation until 4 August.
The CRD regime will capture around 200 entities, comprising:
The CRD legislation amends the Financial Markets Conduct Act 2013 (the FMC Act), the Financial Reporting Act 2013 and the Public Audit Act 2001 and inserts a new Part 7A to the FMC Act. Under the legislation, CREs will be required to:
*The Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 amended the Financial Markets Conduct Act 2013 (FMC Act), the Financial Reporting Act 2013, and the Public Audit Act 2001.