Consumer Affairs Minister Scott Simpson.
Photo: VNP / Phil Smith
Climate reporting rules to be eased, fewer to be required to report
Threshold for reporting raised to companies worth $1b from current $60m
Personal liability of directors for misreporting to be removed
Kiwisaver providers to be required to detail investment in private assets
The government will ease mandatory climate reporting requirements for large companies to lighten the burden and cost on businesses.
At present about 170 large companies, banks, investment managers, and insurers are required to publish an annual report on the impact of climate change on its businesses and its efforts to reduce emissions.
Banks and financial analysts had been using the statements to assess the financial risks posed by climate change, with the aim of lowering lending and investment risks.
Commerce and Consumer Affairs Minister Scott Simpson signalled the changes at the start of the year, and said the current regime was too onerous and expensive.
“Mandatory climate reporting has imposed heavy costs on listed businesses. Some entities tell me they have spent up to $2 million on compliance, money they would rather invest in practical emissions reductions such as electric vehicles.”
Only the big to report
Simpson said mandatory climate reporting was important and useful but “common sense” changes were needed to make it “fit for purpose”.
Only companies with a capitalisation of $1 bn will be required to produce climate change statements. Currently the threshold is $60m, capturing many of the companies on the stock exchange’s benchmark NZX-50 index.
Kiwisaver funds would be dropped from reporting, because the reports were not regarded as useful in making investment decisions.
However, banks, credit unions, building societies and insurers would still be required to report.
Overall the number of companies and organisations required to report would drop to about 76 from the current 164.
The personal liability of directors for any breaches of climate reporting standards would also be abolished.
However, Kiwisaver providers and other managed investment funds would be required to detail how their investments were split between public and private markets, and between New Zealand and foreign owned assets.
Simpson said feedback on a proposal to let Kiwisaver funds get into private assets showed the need for better investor information.
“Greater transparency is an important step toward increased private asset investment. Globally, more capital is moving into unlisted assets, and we are seeing the same trend here. Better information will help investors understand these opportunities,” he said.
Simpson hoped to have the changes passed and in operation by the middle of next year.
Industry backs changes
The finance industry was quick to back the changes.
“These reforms are a positive step toward ensuring our capital markets remain vibrant, competitive, and accessible,” Financial Services Council chief executive Kirk Hope said.
NZX spokesperson Simon Beattie said the changes were practical and sensible, particularly removing personal liability of directors, and would help make the stock exchange more attractive to local companies.
“Companies have told us the… settings have been prohibitive to listing. Likewise listed companies have told NZX the settings, costs and requirements could lead to them delisting.”
But responsible investing lobby group Mindful Money called the changes a backwards step.
“These changes are out of step with the requirements facing our exporters, companies seeking to attract international capital and our New Zealand-based managed funds,” co-chief executive Barry Coates said.
“If we want a strong economy, it needs to be properly regulated, not just a free-for-all without rules and reporting.”
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
