ESG 2025 round-up and outlook for 2026

Welcome to our 2025 ESG round-up and outlook for 2026, where we summarise trends in Environmental, Social and Governance (ESG) law and policy in New Zealand. There is lots going on, and the Russell McVeagh team is here to help. Get in touch if you would like to discuss further. 

Major changes to New Zealand's climate framework ahead

2025 has been a year of significant change in New Zealand's overarching response to climate change. Among other things:

• In January, the Government submitted New Zealand's second nationally determined contribution (NDC) under the Paris Agreement, which aims to reduce net emissions by 51% to 55% compared to 2005 gross levels by 2035. The previous NDC was a 50% reduction by 2030. 
• In October, the Government announced that it would weaken New Zealand's 2050 domestic emissions reduction target for methane in the Climate Change Response Act 2002 (CCR Act) from a 24-47% reduction against 2017 levels to a 14-24% reduction. 
• Most recently, on 4 November the Government announced a suite of other changes to the CCR Act. Particularly significant changes include removing the provision within the CCR Act that requires emissions trading scheme (ETS) price and unit settings to accord with New Zealand's nationally determined contributions, removing the Climate Change Commission's role in advising the Government on emissions reduction plans (unless specifically requested by the Minister), and substantially reducing the requirements for public consultation on emissions budgets.  

Roll-back of climate-related disclosures to kick in

This year saw the Government announce major changes to New Zealand's mandatory climate-related disclosures regime in Part 7A of the Financial Markets Conduct Act 2013 (FMC Act). In October, the Government announced that it would amend the regime by: 

• raising the threshold that triggers reporting requirements for listed issuers from $60 million to $1 billion;
• removing managers of registered managed investment schemes from the regime entirely; and
• relieving directors of automatic liability for non-compliant disclosures. 

These changes are expected to be implemented through legislative amendment in 2026.

For those entities that will be "out" of the regime going forward, the Financial Markets Authority has announced that it will not take regulatory action against an affected entity for breaches of the climate reporting requirements in Part 7A from 1 November, although this does not necessarily preclude third parties from taking legal action. The NZX has also issued class waivers to those NZX Listing Rules that require annual reports to include a copy of the climate statements.

While the changes represent a significant narrowing of the climate-related disclosures regime, organisations should remain aware that:

• They can still prepare voluntary disclosures if they wish, although care should be taken to avoid any false, misleading or unsubstantiated statements.
• Issuers with quoted equity securities are still required to comply (or explain why they are not complying) with the recommendations of the NZX Corporate Governance Code, which include recommendations to report on material risks and to prepare annual non-financial disclosures (including on ESG matters).
• Despite changes to director liability settings, it remains important for reporting entities to have proper processes in place to support compliant disclosures.

Further relief will be provided to organisations through an additional two-year extension of optional adoption relief for anticipated financial impacts and scope 3 emissions disclosure and assurance. The extension was agreed to by the External Reporting Board at the end of October and will be implemented by amendments to the relevant climate and assurance standards.

For more information, read our insight Major changes to climate-related disclosures announced: your questions answered.

ETS to get a market governance framework

In May of this year, the Government announced changes to the Emissions Trading Scheme (ETS) designed to improve its market governance. This announcement was long awaited, with the original consultation closing in early 2023. They key changes will include market conduct obligations in relation to price manipulation and false / misleading conduct, and monitoring and reporting changes. Previous proposals to establish a government-funded exchange / clearing house have been abandoned. 

Climate adaptation framework priorities to be actioned

In October, the Government released its much awaited "National Adaptation Framework". Running to a total of four pages, the framework is light on detail but does propose legislation to clarify the responsibilities of local government by requiring adaptation plans in the highest priority risk areas. There is no current proposal for specific managed retreat legislation. 

For more information, read our insight Climate adaptation: where to from here?

ESG litigation more of a bubble than a roar

While recent years have seen a significant uptick in ESG and climate-related litigation in New Zealand, 2025 has been more "bubbling along". Key developments in 2025 included: 

• Lawyers for Climate Action New Zealand Incorporated (LCANZI) and Z Energy reaching a settlement in relation to LCANZI's greenwashing claim in relation to Z Energy's "Moving with the Times" campaign.
• The dismissal by the Court of Appeal of LCANZI's judicial review challenge against the Climate Change Commission and the Government in relation to the Commission's May 2021 advice to the Government on emissions reductions, and the subsequent policy decisions.
• The announcement in June 2025 that LCANZI has filed a new judicial review against the Minister of Climate Change challenging the Government's second emissions reduction plan.  
• The release in July of the International Court of Justice's Advisory Opinion on the Obligations of States in respect of Climate Change, which is likely to influence future decisions of New Zealand's domestic courts.
• Smith v Fonterra (New Zealand's first major climate tort case) inching towards trial, with procedural decisions regarding joinder of additional parties and the format of the trial released in 2025.
• New Zealand's consumer and financial services regulators are continuing to sharpen their focus on greenwashing, with the FMA recently closing consultation on proposed greenwashing guidance for issuers of financial products that incorporate ethical characteristics. While we are yet to see a wave of regulatory litigation in this space, we expect greenwashing to remain an area of regulatory scrutiny. 

For more information, read our insights:

• Court of Appeal considers judicial review principles in climate case
• New climate change litigation challenges "net" approach to Government emissions policies
• ICJ Advisory Opinion on climate change: implications for New Zealand

Woke banking legislation to live or die

The Finance and Expenditure Committee is due to report back on the Financial Markets (Conduct of Institutions) Amendment (Duty to Provide Financial Services) Amendment Bill by 21 November of this year. The Bill, colloquially named the "woke banking" bill, endeavours to prevent banks withdrawing services from customers for non-commercial reasons such as "murky 'environmental, social or governance' moralising". Concerns as to the practical workability of the Bill have been raised by numerous stakeholders (including Russell McVeagh), though it remains to be seen to what extent those concerns will be addressed following the Select Committee process. 

For more information, read our insight "Woke banking" (and other financial institutions) bill to proceed to first reading

Any questions? Talk to one of our experts.

This content 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, please contact a Russell McVeagh partner/solicitor.