Having our say on amendments to Climate and Assurance Standards
In response to feedback, the External Reporting Board Te Kāwai Ārahi Pūrongo Mōwaho (XRB) released a consultation document and exposure draft on 8 October 2024 proposing amendments to Climate and Assurance Standards (which closed 30 October).
Many of our members are directors of climate reporting entities (CREs) that are directly affected by the climate-related disclosure (CRD) regime. Meeting the Aotearoa New Zealand Climate Standards (the Standards) has been a challenging process for many CREs, even those that had previously been voluntary reporters.
We received strong feedback from members, many who are directors of CREs, in support of relief due to the challenges faced with obtaining reliable data, and how to disclose in the absence of comprehensive guidance on certain topics. Concerns were also raised about obtaining assurance over Scope 3 greenhouse gas emissions disclosures because of difficulties in obtaining sufficient reliable data from up and downstream entities and the ongoing shortage of assurance practitioners.
The potential liability of the legislation has also raised concerns for directors, given the new and evolving state of data and advice being given.
Various assessments of disclosures from the first reporting period under the Standards have identified areas where the disclosures can be enhanced. On 21 October 2024 we released, in conjunction with KPMG, Lessons from the front line, a new resource designed to provide directors with guidance to support reporting. The guidance also highlights areas of concern for directors, which echoes the strong feedback we have been receiving from CREs and the need for more time to be efficient in the delivery of this growing suit of information, including nature-based data and disclosures.
In the resource we acknowledge there is significant preparatory work that needs to be done. More needs to be done to ensure CREs can confidently report on financial impacts, Scope 3 GHG emissions and transition planning. We support the XRB’s intention that, by allowing further time through Adoption Provisions, CREs can get started now on these challenging areas of disclosure so that they are better prepared for when they are a mandatory part of the reporting regime.
We fully support the Government’s objectives to address climate change and the introduction of mandatory climate reporting requirements. These regulations are a vital step towards a sustainable future, and we are eager to ensure their successful implementation.
Compliance and reporting in itself is not the end goal. Rather, it is about communicating with stakeholders, identifying the risks and opportunities, maintaining a locally and globally competitive market position, and transforming businesses for a climate-changed future. Our overarching concern is that the reporting regime and Standards must incentivise the right behaviours, including, most importantly, climate action.
