Mandatory reporting for climate-related disclosures is now in effect. Affected entities are required to disclose according to the standard for accounting periods that start on or after 1 January 2023.
The XRB has now published its final disclosure standards, based on the recommendations provided by the TCFD (Task Force on Climate-Related Financial Disclosures):
- NZ CS 1 provides a framework for entities to consider climate-related risks and opportunities
- NZ CS 2 outlines a limited number of adoption provisions
- NZ CS 3 establishes principles and general requirements
Currently, the requirements only apply to large listed companies (with a market capitalisation of over $60 million), large registered banks, licensed insurers, credit unions, building societies, and managers of investment schemes with more than $1 billion in assets, as well as some Crown financial institutions. However, it is expected that the requirements will trickle down to New Zealand’s wider business community in time. Even for organisations that aren’t affected by the regulations, undertaking some of the below steps will be a key way to move your sustainability journey forward – many businesses of all shapes and sizes are acting on climate change and it’s important not just to wait for regulations to come in before making a start.
Understanding climate risks
To prepare for climate-related disclosures, it’s a good idea to start assessing your organisation to understand where your climate-related risks and opportunities lie. We’ve created a handy framework to help you understand and mitigate your climate risks, which you can read here.
READ OUR UNDERSTANDING CLIMATE RISKS GUIDE
Measuring your carbon footprint
Central to the new standards is the requirement for businesses to measure and report on their greenhouse gas emissions. This is a useful exercise even if you are not an affected entity, as it will enable you to start your carbon reduction journey as we transition to a low emissions economy. It’s also an opportunity not just to find efficiencies but also to gain a competitive advantage, with businesses, employees and consumers increasingly expecting the organisations they work with or buy from to operate more sustainably.
Building networks to help your sustainability journey
Finally, it’s important you don’t go it alone. Many people in your organisation will likely be passionate about sustainability, and will be eager to help out as you transition to a more environmentally-friendly organisation. Share the load by establishing networks of employees that can support you, as well as finding out what industry peers are doing. It can also be useful to seek independent advice, especially if you aren’t sure where to start. BDO offers a range of specialist sustainability services, from carbon footprint measurement and reduction, to bespoke ESG (Environmental, Social & Governance) consulting services. We also offer full TCFD audits.
Reach out to your local adviser today to find out more.