International and local climate standards comparison
The External Reporting Board (XRB) has released a comparison of Aotearoa New Zealand Climate Standards (NZ CS1, 2 and 3) with the latest International Sustainability Standards Board (ISSB) Sustainability Disclosure Standards (IFRS S1 and S2).
It shows there is a strong degree of alignment between the local and global standards but New Zealand companies may not meet their reporting obligations if they only apply IFRS S1 and S2.
The XRB highlights 10 key differences that preparers should be aware of across a range of factors including climate scenario analysis, financial impacts and resilience.
While the international climate standard IFRS S2 is more detailed in some respects than NZ CS, there are significant differences with NZ CS in terms of the disclosure of climate strategy, the XRB notes.
New Zealand was the first country in the world to introduce mandatory climate reporting through the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act in 2021. The disclosure requirements currently apply to around 200 large financial institutions, who are required to report from 2023.
The XRB intends to undertake a post-implementation review of NZ CS, beginning in 2025, to assess the impact of the standards on preparers, auditors and users. As part of the post-implementation review, there will be consideration of aligning NZ CS more closely with the emerging international standards.
