New Zealand to relax climate reporting rules over cost concerns
Companies listed on the country’s main exchange will now only have to provide disclosures if their market capitalization is NZ$1 billion or more
NEW Zealand is relaxing climate reporting rules on concerns over the cost to businesses, in another retreat from policies designed to limit greenhouse gas emissions.
Companies listed on the NZX, the country’s main exchange, will now only have to provide disclosures if their market capitalization is NZ$1 billion (S$740 million) or more, Commerce Minister Scott Simpson said Wednesday in Wellington. The previous threshold was NZ$60 million. In addition, directors will no longer be deemed liable if companies break the reporting rules, he said.
New Zealand was the first nation to legislate for mandatory climate-related disclosures when Jacinda Ardern’s government passed a law in 2021 designed to make the risks more transparent for investors and regulators. The centre-right government that won power in late 2023 has softened a number of initiatives aimed at tackling emissions, citing their impact on farmers and business.
“While the intentions were solid, the rules proved too onerous and have become a deterrent for potential listers,” Simpson said. “It made sense to review these after the first year of reporting. We have listened to the feedback, examined how the regime operates in practice, and are now resetting the settings accordingly.”
Some firms claimed the cost of complying with the reporting rules was as much as NZ$2 million, he said.
The decision to relax disclosure rules comes just days after New Zealand adopted a less ambitious methane emissions target and ruled out a tax on farm emissions. A ban on offshore oil and gas exploration has also been relaxed, and new rules introduced to slow the rate at which farmland is being converted into forestry for carbon credits.
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Lawmakers in the European Union this month also moved to limit the scope of sustainability reporting directives amid criticism from companies, while Singapore in August extended the timeline for some listed firms to comply with disclosure requirements.
In New Zealand, the impact of the rules “has been to impose significant costs to listed companies in assurance, consultants and legal advice,” NZX’s general manager of Corporate Affairs and Sustainability Simon Beattie said in a statement. “This is money and effort that could be better spent on climate mitigation, transition and adaptation. Removing this liability will make a material difference.”
The country’s disclosure rules had been helping to ensure climate risks were being properly considered by businesses, according to Barry Coates, co-chief executive of ethical investment manager Mindful Money.
“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,” Coates said. “This is also yet another sign to international audiences that New Zealand is backing off its commitment to take action on climate change.” BLOOMBERG
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