The New Zealand government announced on 22 October plans to simplify sustainability disclosures for companies, more than halving the number of entities required to report their greenhouse gas (GHG) emissions.
The scope for mandatory disclosures will narrow, according to commerce and consumer affairs minister Scott Simpson, with the threshold rising to listed companies with a NZ$1bn ($574mn) market capitalisation, from the previous NZ$60mn. Managed investment schemes — currently mandated to report if they have more than NZ$1bn in total assets — will also be exempted from any requirement.
The government estimates the changes will reduce the overall number of reporting entities to 76 from 164.
In addition to that, climate disclosures will not have to provide the same level of evidence as financial disclosures, owing to the "future-focused and uncertain information" involved in sustainability reporting. And directors will no longer have personal liability if their company breaks reporting rules, but "will still be liable for misleading or deceptive conduct or false or misleading statements".
Simpson explained that 'the [previous] rules proved too onerous and have become a deterrent for potential listers".
Legislation to put the changes into effect will be passed in 2026.
Mandatory climate reporting in New Zealand began on 1 January 2023, with the first reports produced last year. The rules require companies within the threshold to report direct and indirect emissions across their value chains, divided into scope 1, 2 and 3 according to international standards.
Scope 2 emissions from purchased electricity, heat and steam must be calculated using the location-based method, although market-based tools — of which renewable energy certificates (RECs) are an example — can be used for "additional disclosures".
New Zealand received approval to issue international RECs (I-RECs) from the International Tracking Standard (I-Track) Foundation in late 2023. The country also has a domestic voluntary system, the New Zealand Energy Certificate System (NZECS) and has previously considered adopting a guarantee of origin (GOO) system aligned with Australia.
