Climate reporting excellence: Key learnings from New Zealand’s Financial Markets Authority’s review
Climate reporting excellence: Key learnings from New Zealand’s Financial Markets Authority’s review
In December 2024, the New Zealand Financial Market Authority (FMA) published its report, "Climate-related Disclosures: Insights from our reviews". This comprehensive review of 70 climate statements, covering periods ending 31 December 2023, 31 January 2024 and 31 March 2024, offers crucial insights for climate reporting entities.
As one of the first countries to implement mandatory climate reporting, New Zealand’s initiative aims to provide early and constructive feedback to enhance future disclosures. This report is particularly valuable for Australian entities preparing to embark on their own mandatory climate reporting journey, offering a wealth of lessons and best practices to guide their efforts.
The key takeaways:
- Compliance and quality: Of the 70 climate statements reviewed, the overall quality met expectations. However, the quality of disclosures varied, with some entities excelling and others needing improvement.
- Challenges faced: Many entities encountered difficulties in obtaining reliable data, higher-than-expected costs, and uncertainties in making disclosures without comprehensive guidance.
- Materiality and fair presentation: The report emphasised the importance of materiality and fair presentation in climate disclosures. Entities must ensure that their disclosures are relevant and accurately reflect their climate-related risks and opportunities.
- Methods and assumptions: The need for transparency in the methods, assumptions, and data used in climate disclosures was highlighted. This includes addressing estimation uncertainties and ensuring consistency with other reported information.
- Scenario analysis: Scenario analysis was encouraged to help entities understand and communicate the potential impacts of climate change on their operations.
- Future monitoring: The FMA plans to continue monitoring climate disclosures and provide ongoing feedback to help entities improve their reporting practices.
Preparing your reporting requirements
We understand the significant effort climate reporting entities are putting into preparing their first mandatory climate statements. From understanding the requirements to developing processes for preparing and lodging climate statements, it takes time and resources. Our team is here to help you assess your readiness against the latest sustainability reporting requirements. Contact us today to get started.