Submission on Assurance over Climate-related Disclosures

The Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 (CRD Act) introduced a new climate-related disclosures regime in New Zealand. The CRD Act contains an assurance requirement that comes into force in October 2024 with disclosures in climate statements relating to greenhouse gas (GHG) emissions (only) to be independently assured.

The IoD has identified climate change as one of our Top Five Issues for Directors each year since 2018. Directors clearly see climate action as a key leadership theme, which is evidenced by director member feedback in a range of surveys, including our annual Director Sentiment Survey.

To this end, we made submissions on the amendment bill, as well as all three rounds of consultation by the External Reporting Board (XRB) on the disclosure standards:

• Amendment Bill: Submission on the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill
• Consultation Round 1: Submission on Aotearoa New Zealand Climate Standard 1: Climate-related Disclosures
• Consultation Round 2: Submission on Aotearoa New Zealand Climate Standard 1: Climate-related Disclosures (Strategy and Metrics and Targets)
• Consultation Round 3: Submission on Climate-related Disclosure Standards Exposure draft

The Ministry of Business Innovation and Employment in conjunction with the Ministry for the Environment released a consultation document discussing potential options around developing licensing arrangements for CRD assurance practitioners in the CRD Act (Issue 1), and expanding the scope of the assurance requirement to cover the full climate statement is also part of the current consultation document (Issue 2).

The IoD continue to support climate-related disclosures and the development of the standards, regulatory framework and professional capability and competence to support the new reporting regime. We also support the introduction of an occupational licensing regime for climate-related disclosure (CRD) assurance practitioners with the Financial Markets Authority (FMA) as we consider that it will provide greater trust and confidence in the climate statements for directors, as well as for those wishing to access them. While supporting the disclosures, we recommend that the timeframe for the preparation and assurance of climate statements, should the scope of assurance requirements expand, be changed to 6 months to develop the capability and capacity of the newly-formed CRD assurance practitioner sector.