Progress on the introduction of a mandatory climate-related disclosures regime in Aotearoa is continuing at pace with the Economic Development, Science and Innovation Committee having now invited written submissions on the Financial Sector (Climate-related Disclosures And Other Matters) Amendment Bill. The closing date for those submissions is 28 May 2021 and the select committee is currently due to report back to the House by 16 August 2021.
In light of both the significance of the regulatory reform, and the tight timeframe, engagement by affected parties will be pivotal to ensure that the legislation is fit for purpose.
Get in touch with one of our experts should you wish to understand more about climate-related disclosures or wish to discuss participating in the select committee process.
What does the Bill do?
As set out in our previous update (available here), the Bill is the first step towards introducing mandatory climate-related disclosures for certain New Zealand entities. The Bill requires "Climate Reporting Entities" to collect, retain and disclose certain climate-related information.
As previously mentioned, "Climate Reporting Entities" in the Bill broadly include:
- registered banks, credit unions, and building societies with total assets of more than $1 billion for each of the two preceding accounting periods;
- managers of registered investment schemes with greater than $1 billion in total assets under management for each of the manager's two preceding accounting periods;
- licensed insurers with greater than $1 billion in total assets under management or annual gross premium revenue greater than $250 million for each of the two preceding accounting periods; and
- equity and debt issuers listed on the NZX.
While Crown Financial Institutions with greater than $1 billion in total assets are not mentioned in the Bill, the Minister of Finance has issued letters of expectation to those institutions which state the Minister's expectation that they will report climate-related matters in line with the recommendations of the Task Force on Climate-related Financial Disclosures in the future.
The introduction of mandatory climate-related reporting is likely to have significant implications for Climate Reporting Entities, which could be required to make disclosures in line with the new regime from FY2023. Failure to comply with the legislation once enacted could have serious implications for entities and individuals as the penalties under the proposed regime are significant (including both fines and, for individuals, potential imprisonment).
Get in touch
As above, get in touch with your usual Russell McVeagh contact or one of our experts if you wish to discuss the Bill or your participation in the select committee process.
This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.