The changing landscape of climate regulation and litigation

The regulatory and litigation landscape for climate governance is shifting at an unprecedented pace. For directors, understanding the risks and opportunities presented by evolving laws and legal challenges is no longer optional – it is essential.

At the recent Chapter Zero NZ webinar on The changing landscape of climate regulation and litigation, experts Daniel Street (DLA Piper), Florence Van Dyke (New Zealand Trade and Enterprise), and Rob Hewett (Silver Fern Farms) provided a deep dive into the legal, regulatory and trade implications of climate change.

The global regulatory environment for climate is messy, fragmented and constantly evolving. Daniel Street, Sustainability and ESG lead partner at DLA Piper, described it as a "whiplash effect" where companies are preparing for new regulations only to see them revised, rolled back or reinterpreted. But it’s not all one way.

In the US for example, federal climate reporting rules have weakened, however states such as California and New York continue to push for strict climate disclosure and accountability. Similarly, while the EU is scaling back elements of its Corporate Sustainability Reporting Directive (CSRD), reducing its scope by 80 per cent, they are still maintaining strong supply chain due diligence requirements and countries like France are increasing regulation.

Climate regulation is also maturing across the Asia Pacific, particularly in China, Japan and Australia, requiring businesses to navigate a patchwork of compliance obligations.

For New Zealand directors this means staying agile and focused on substantive action rather than just regulatory compliance. “While the regulatory landscape is unsettled, the long-term trajectory is clear – more transparency, more scrutiny, and more legal risk for inaction,” said Street.

While some debate the pace and extent of climate regulation, global markets have already made their decision – sustainability is a business imperative. Florence Van Dyke, Head of Sustainability at NZTE, emphasised climate action is no longer about competitive advantage, it’s about market access.

Some 85 per cent of New Zealand exports by value go to countries that already have or are implementing climate-related disclosures. Large multinational buyers such as Tesco, McDonald's, and Danone are demanding carbon footprint transparency from suppliers, regardless of domestic regulation. And carbon border tariffs (such as the EU’s CBAM) could soon extend to agriculture and food exports, creating new risks for New Zealand businesses.

“If you're an exporter, and you don’t have a sustainability strategy, you’re already behind,” said Van Dyke. “Your customers will expect carbon footprint data within the next 12 to 24 months, if they haven’t already.”

Rob Hewett, Chair of Silver Fern Farms, offered a pragmatic, market-driven perspective. “If the customer wants something, you better be ready to listen,” he said.

Silver Fern Farms’ Net Carbon Zero meat is an example of how climate action can unlock market opportunities. The company spent five years developing a robust, science-backed verification system to prove its emissions reductions. The result? It secured a long-coveted deal with Whole Foods in the US – a market previously unreachable to New Zealand beef and lamb producers.

“The halo effect has been remarkable,” said Hewett. “It’s not just about the Net Carbon Zero line, it’s lifted our entire brand and driven demand across our product range.”

While many boards are seeing climate change from a regulatory or compliance perspective, Hewett says this is about shareholder value and remaining competitive. “Don't do this because of regulation. Do it because it's the only way to maintain long-term competitiveness. If we don’t act now, we’ll be left behind.”

Climate regulation and litigation are no longer distant concerns. They are shaping market access, shareholder expectations and director liabilities today. In Australia we have seen ASIC increasing action on greenwashing, enforcing legal obligations that prohibit misleading and deceptive conduct. In New Zealand, while our regulators are taking a less ‘headline’ approach, they are actively targeting misleading sustainability claims, issuing “please explain” letters to companies with vague or overstated climate commitments.

Supply chain due diligence is another area of potential legal risk. The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) means New Zealand companies exporting to Europe could face legal consequences for unsustainable practices in their value chains.

“The companies that focus on real-world action, not just reporting, will be in the strongest legal and commercial position,” said Street.

While financial concerns of climate action and achieving net zero goals continue to be key concerns for boards, it was stressed that failure to act is not just a reputational risk but a direct threat to long-term viability.

Boards cannot afford to take a ‘do nothing’ approach to sustainability because ignoring the issue or hoping it will go away is not a viable strategy. Consumer expectations, regulatory requirements and market dynamics are shifting rapidly, making sustainability a necessity rather than a choice. Businesses that fail to adapt risk being excluded from premium markets, losing relevance and facing increasing financial and reputational costs. While the costs of action may seem high, the cost of inaction – being left behind as the market evolves – is far greater.

The question for boards is not if they can afford to transition but whether they can afford not to because change will happen regardless of whether they are prepared for it. As Hewett put it, “If you don’t do this, you won’t play. And if you won’t play, you won’t exist.”

Considerations for directors:

• Understand the legal risks
• Climate regulation is changing rapidly and inconsistently
• Legal liability for directors is evolving, particularly around disclosures and supply chain accountability
• Ensure your climate strategy is grounded in action, not just compliance
• Future-proof market access
• Climate action is now a “ticket to play” in global trade
• Expect increased pressure from multinational buyers, carbon border taxes, and stricter reporting requirements
• Invest in verifiable emissions reductions – not just in marketing claims
• Embed climate in governance
• Sustainability is not just a compliance function – it must be integrated at the board level
• Directors should demand regular sustainability updates, ensure credible carbon accounting, and drive meaningful action
• Directors need to look for the opportunities, not just focus on risk and compliance

*AI assisted