NEW ZEALAND Law and Practice Contributed by: Josh Williams, Anderson Lloyd
Relationship With IFRS S1 and S2 Disclosure Standards As New Zealand’s climate standards were released before the IFRS standards, they were prepared based on the recommendations of the Task Force on Cli - mate-Related Financial Disclosures. Since the release of the IFRS standards, the XRB has undergone a comparison of the New Zealand stand - ards against the IFRS standards and has now publicly released a comparison document (Comparison Docu - ment). In regard to alignment between the documents, the Comparison Document states that: • the core content of NZ CS 1 is consistent with that of IFRS S2 (ie, the four pillars in both documents are governance, strategy, risk management, and metrics and targets); and • the key concepts and general requirements in NZ CS 3 and IFRS S1, such as the principles of mate - riality and fair presentation, are also well aligned. However, the Comparison Document provides that there are also many differences in detail which mean that, if a reporting entity applies the IFRS standards, it may not necessarily comply with New Zealand stand - ards, and vice versa. In several areas, there are in fact substantive differences in terms of the underlying approach, analysis or effort required by reporting enti - ties to ensure compliance. It is important that report - ing entities unfamiliar with New Zealand’s climate standards (or vice versa) refer to this document when seeking to comply with the other set of standards. 4.2 Directors’ Climate Change Liability Under New Zealand’s current statutory framework, there are no specific requirements mandating direc - tors to consider the impacts of climate change in their decision-making. However, a 2023 amendment to section 131 of the Companies Act 1993 introduced, in clear terms, that directors may consider factors other than the maximisation of profit when determining what constitutes the “best interests” of the company. This amendment explicitly includes “environmental fac - tors” as an example of such additional considerations. Notwithstanding that section 131 was only amend -
• all registered banks, credit unions, and building societies with total assets of more than NZD1 bil - lion at their two preceding year-end balance dates; • all licensed insurers with greater than NZD1 billion in total assets (including any subsidiaries) as at their two preceding year-end balance dates and/ or annual premium revenue exceeding NZD250 million in each of their two preceding year-end bal - ance dates; • listed issuers of quoted equity securities that had (quoted or unquoted) equity securities with a total value, as implied by the market price or fair value, exceeding NZD1 billion as at their two preceding year-end balance dates; and • listed issuers of quoted debt securities that had quoted debt securities with a total face value exceeding NZD1 billion at any time in their two preceding accounting periods. In addition, Crown Financial Institutions with greater than NZD1 billion in total assets under management are required to produce climate-related disclosures. The relevant threshold for capturing listed companies increased in March 2026 (with transitional regulatory relief applied during implementation) from those with a market capitalisation of NZD60 million to NZD1 bil - lion in each of the two preceding reporting periods, provided that the entity remains listed in the current period. Managed investment schemes also no longer fall within the scope of the regime. This change halved the number of reporting entities from approximately 164 to 76, significantly narrowing the scope of man - datory disclosures. Entities that fall below the new threshold may still choose to report voluntarily. The goal of mandatory climate-related disclosures is to: • ensure that the effects of climate change are rou - tinely considered in business, investment, lending, and insurance underwriting decisions; • help climate reporting entities better demonstrate responsibility and foresight in their consideration of climate issues; and • lead to more efficient allocation of capital, and help smooth the transition to a more sustainable, low- emissions economy.
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