Mandatory climate-related financial disclosures

The Government plans to make climate-related financial disclosures mandatory for some organisations. The requirement would apply to publicly listed companies and large insurers, banks and investment managers. 

Cabinet agreed to introduce a mandatory regime through an amendment to the Financial Markets Conduct Act (2013). If approved by Parliament, financial entities could be required to make disclosures in 2023 at the earliest

Purpose of mandatory reporting

The majority of large New Zealand entities provide limited or no information on what climate change might mean to them, or are reporting in inconsistent ways. 

This information deficit is driving what the Productivity Commission termed in their Low Emissions Economy report “an ongoing and systemic overvaluation of emissions-intensive activities”. 

The goal of mandatory climate-related financial disclosures is to:

  • promote greater transparency and more accurate pricing signals in the market 
  • incentivise low-emissions investment
  • create a level-playing field for businesses already considering climate change in their longer-term risks. 

This would help New Zealand meet its international obligations and achieve its target of zero carbon by 2050. It would also help to address climate change risks outlined in the National Climate Change Risk Assessment by making our financial system more resilient. 

First national climate change risk assessment for New Zealand

Organisations that would have to make disclosures

There are around 200 entities in New Zealand that would be required to produce climate-related financial disclosures (make disclosures). 

  • All registered banks, credit unions, and building societies with total assets of more than $1 billion. 
  • All managers of registered investment schemes with greater than $1 billion in total assets under management. 
  • All licensed insurers with greater than $1 billion in total assets under management or annual premium income greater than $250 million.
  • All equity and debt issuers listed on the NZX.
  • Crown financial institutions with greater than $1 billion in total assets under management.

Entities would be required to make disclosures if they are over the thresholds on the last day of the two most recent financial years.

Managers of registered investment schemes would be required to make disclosures on a fund-by-fund basis. This would ensure investors receive the information needed to understand the impact of climate change on the future performance of their investment.        

Overseas incorporated organisations would be required to make disclosures in their New Zealand annual reporting if they are over the above thresholds. This would ensure their New Zealand stakeholders’ needs are met.

Foreign exempt issuers listed on the NZX would not be required to make disclosures under this regime. This is consistent with the NZX listing rules.

The thresholds would be increased from time to time to reflect the movements in a suitable price index.

What reporting would require

Reporting would be against a standard that would be issued by the External Reporting Board. The standard would be developed in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures (June 2017)

The TCFD recommendations are structured around four thematic areas that represent core elements of how organisations operate.

They are: 

  • governance
  • strategy
  • risk management
  • metrics and targets (see recommended disclosures section).

The recommendations are considered international best practice for climate-related financial reporting and are already being used in New Zealand and other countries on a voluntary basis. 

Recommended disclosures from the TCFD


  • Describe the board’s oversight of climate-related risks and opportunities.
  • Describe management’s role in assessing and managing climate-related risks and opportunities.


  • Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.
  • Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning.
  • Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. 

Risk management

  • Describe the organisation’s processes for identifying and assessing climate-related risks.
  • Describe the organisation’s processes for managing climate-related risks.
  • Describe how processes for managing climate-related risks are integrated into the organisation’s overall risk management.

Metrics and targets

  • Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process.
  • Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
  • Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. 

How disclosures would be made

Disclosures would be made on a ‘comply-or-explain’ basis. This means that where information is not available or disclosures are not possible following best endeavours, reporting organisations can explain rather than disclosing. Further details would be made available in implementation guidance. 

Other reporting frameworks aligned with the TCFD framework can also be used. More detail on this would be made available in upcoming implementation guidance.

Elements of the disclosures relating to greenhouse gas emissions would be required to have independent assurance. 

The Financial Markets Authority would be responsible for independent monitoring, reporting and enforcement of the regime.

Implementation guidance 

The External Reporting Board will develop, consult on and issue new reporting standards and implementation guidance material to assist businesses required to disclose. 

The Ministry for the Environment will work closely with regulated parties on how to undertake the ‘scenario analysis’ component of the disclosures. 

Email if you’d like to be involved in those discussions.

International guidance

Some international organisations have begun producing good practice handbooks, case studies and guidance for reporting climate-related risks and opportunities using the TCFD recommendations. 

Opportunities for public input  

We encourage you to provide input at the Select Committee stage of the legislative process.

There will also be opportunities for stakeholder engagement when the External Reporting Board begins developing new standards and guidance material for producing climate-related financial disclosures. 

Related information