Understanding New Zealand’s ESG and Climate-Related Reporting Framework
New Zealand was one of the early countries to introduce a mandatory climate-related disclosure regime. Rather than creating a single comprehensive ESG reporting law covering environmental, social and governance matters, New Zealand has focused primarily on climate-related financial disclosures.
The regime was established through amendments to the Financial Markets Conduct Act 2013, supported by climate standards issued by the External Reporting Board (XRB) and supervised by the Financial Markets Authority (FMA).
However, the framework is currently undergoing significant reform. In October 2025, the Government announced plans to narrow the scope of mandatory climate reporting, including raising the listed-issuer threshold from NZ$60 million to NZ$1 billion and removing managed investment scheme managers from the regime. The legislation intended to implement these changes had not passed by the time Parliament’s 2026 election-related sitting ended. In September 2026, the FMA therefore extended “no-action” relief for certain affected entities.
Q1. Is ESG reporting mandatory in New Zealand?
There is no single mandatory ESG reporting law covering every company in New Zealand.
However, New Zealand has a mandatory climate-related disclosures (CRD) regime covering specified large financial-market participants known as Climate Reporting Entities (CREs).
Q2. What is a Climate Reporting Entity?
A Climate Reporting Entity is an organization that falls within the statutory scope of New Zealand’s climate-related disclosure regime.
CREs must prepare annual climate statements in accordance with the applicable Aotearoa New Zealand Climate Standards.
Q3. Which law establishes mandatory climate reporting?
The principal legislation is Part 7A of the Financial Markets Conduct Act 2013.
It requires qualifying entities to prepare climate statements and make them publicly available.
Q4. Which regulator supervises climate reporting?
The Financial Markets Authority (FMA) is responsible for monitoring, supervising and enforcing the climate-related disclosure regime.
The External Reporting Board (XRB) develops and issues the applicable climate standards.
Q5. What is the XRB?
The External Reporting Board is New Zealand’s independent financial-reporting standard setter.
For climate reporting, it has issued the Aotearoa New Zealand Climate Standards.
Q6. What are the Aotearoa New Zealand Climate Standards?
The framework consists of three standards:
- NZ CS 1 – Climate-related Disclosures
- NZ CS 2 – Adoption of Aotearoa New Zealand Climate Standards
- NZ CS 3 – General Requirements for Climate-related Disclosures
These standards operate as a package.
Q7. What does NZ CS 1 cover?
NZ CS 1 contains the substantive climate-related disclosure requirements.
It covers four major thematic areas:
- Governance
- Strategy
- Risk management
- Metrics and targets
It also includes requirements relating to greenhouse-gas emissions disclosures.
Q8. What is NZ CS 2?
NZ CS 2 contains limited adoption provisions and transition reliefs that help entities implement the climate standards.
Some disclosures can therefore receive temporary exemptions during an entity’s initial reporting periods.
Q9. What is NZ CS 3?
NZ CS 3 establishes general requirements and principles for preparing climate-related disclosures.
It includes concepts such as materiality and provides the general foundation for applying NZ CS 1 and NZ CS 2.
Q10. When did mandatory climate reporting begin?
The legislation introduced mandatory climate reporting for affected entities for financial years beginning on or after 1 January 2023.
The first reporting cycle therefore began for many entities during 2023.
Q11. Which organizations were originally covered?
The original regime included:
- Large registered banks
- Large credit unions
- Large building societies
- Large investment-scheme managers
- Large licensed insurers
- Large listed equity issuers
- Large listed debt issuers
The exact thresholds depend on the type of entity.
Q12. What was the original threshold for listed issuers?
Under the original regime, a listed equity issuer was generally within scope when its market capitalization exceeded NZ$60 million.
For listed debt issuers, the threshold was based on the face value of quoted debt exceeding NZ$60 million.
Q13. Are those NZ$60 million thresholds still the future position?
Not necessarily.
In October 2025, the Government announced plans to raise both listed equity and debt thresholds from NZ$60 million to NZ$1 billion.
However, the legislation intended to implement these changes had not passed by late 2026.
Q14. What happened to the proposed 2025 reforms?
The Government proposed amendments through the Financial Markets Conduct Amendment Bill.
The reforms were intended to:
- Raise listed-issuer thresholds to NZ$1 billion
- Remove managed investment scheme managers
- Change certain liability provisions
- Allow monetary thresholds to be adjusted through regulation
But the legislation had not been enacted by the end of the relevant parliamentary sitting in 2026.
Q15. What is the current position for entities affected by the proposed reforms?
The FMA has provided no-action relief for certain affected entities because of the uncertainty created by the delayed legislation.
In September 2026, the FMA extended this approach for specified reporting periods with balance dates from March 2027 through January 2028.
Q16. Does no-action relief mean the law has been repealed?
No.
No-action relief is not the same as legislative repeal.
The FMA has used the approach to provide practical certainty while the Government’s policy position and legislative process remain unresolved.
Q17. Are large banks covered by the regime?
Under the existing framework, registered banks, credit unions and building societies with total assets above NZ$1 billion are within the climate-reporting regime.
The 2025 proposed reforms did not propose changing these financial-institution thresholds.
Q18. Are insurers covered?
Under the existing framework, licensed insurers can be Climate Reporting Entities if they exceed the applicable thresholds.
The current framework identifies insurers with more than NZ$1 billion in total assets or more than NZ$250 million in annual gross premium revenue.
Q19. Are managed investment scheme managers covered?
Under the original regime, qualifying managers of registered investment schemes were covered.
However, the Government proposed removing managed investment scheme managers from the mandatory regime, and the FMA has provided interim relief to affected entities while the legislative position remains unresolved.
Q20. Can overseas companies be covered?
Yes.
The existing framework can apply to certain overseas-incorporated organizations where their New Zealand business satisfies the applicable thresholds.
The FMA has also introduced a 2026 exemption framework for certain overseas Climate Reporting Entities.
Q21. What is a climate statement?
A climate statement is the formal disclosure document prepared by a Climate Reporting Entity under the applicable climate-related disclosure framework.
It explains how climate-related risks and opportunities affect the entity.
Q22. When must climate statements be prepared?
Under the Financial Markets Conduct Act, climate statements generally must be completed within four months after the entity’s balance date, subject to the statutory rules and applicable exemptions.
Q23. Are climate statements publicly available?
Yes.
Climate statements are made publicly available through New Zealand’s Climate-related Disclosures Register.
Q24. What is the purpose of mandatory climate reporting?
The regime aims to ensure that climate change is routinely considered in:
- Business decisions
- Investment decisions
- Lending
- Insurance underwriting
- Risk management
- Capital allocation
It is also intended to support New Zealand’s transition toward a low-emissions and climate-resilient economy.
Q25. What are the four main pillars of New Zealand climate reporting?
The framework is structured around:
- Governance
- Strategy
- Risk management
- Metrics and targets
This structure is broadly consistent with the architecture developed by the former TCFD framework.
Q26. What does governance disclosure cover?
Governance disclosure explains how the organization oversees climate-related risks and opportunities.
It may include:
- Board oversight
- Management responsibilities
- Climate expertise
- Policies
- Decision-making
- Monitoring
Q27. What does strategy disclosure cover?
Strategy disclosure addresses how climate-related risks and opportunities affect:
- Business model
- Strategy
- Operations
- Investments
- Financial planning
- Resilience
Q28. What are climate-related risks?
Climate-related risks generally fall into two broad categories:
Physical risks – risks arising from physical climate events or long-term climate changes.
Transition risks – risks arising from the transition toward a low-emissions economy.
Q29. What are physical climate risks?
Examples include:
- Flooding
- Drought
- Extreme temperatures
- Storms
- Wildfires
- Sea-level rise
- Water shortages
Q30. What are transition risks?
Transition risks may arise from:
- New climate regulations
- Carbon pricing
- Technology changes
- Changing consumer preferences
- Market changes
- Energy-system transformation
Q31. What are climate-related opportunities?
Climate change can also create opportunities through:
- Renewable energy
- Energy efficiency
- Low-emission products
- New technologies
- Sustainable finance
- Resilient infrastructure
- Changing consumer demand
Q32. What are Scope 1 emissions?
Scope 1 emissions are direct greenhouse-gas emissions from sources owned or controlled by the reporting entity.
Examples include emissions from company-owned vehicles and fuel combustion.
Q33. What are Scope 2 emissions?
Scope 2 emissions are indirect emissions associated with purchased or acquired energy, such as electricity, heating, cooling and steam.
Q34. What are Scope 3 emissions?
Scope 3 emissions are other indirect emissions generated throughout an organization’s value chain.
Examples include:
- Purchased goods
- Transportation
- Business travel
- Employee commuting
- Waste
- Use of products sold
Q35. Is greenhouse-gas assurance mandatory?
Yes, for Climate Reporting Entities.
The parts of climate statements relating to greenhouse-gas emissions must be independently assured, and an assurance report must be lodged with the climate statement.
Q36. When did GHG assurance requirements begin?
Independent assurance applies to the relevant greenhouse-gas disclosures for reporting years ending on or after 27 October 2024.
Q37. Is the entire climate statement subject to assurance?
The mandatory assurance requirement specifically covers the greenhouse-gas emissions component.
It should not be confused with a requirement for reasonable assurance over every part of the climate statement.
Q38. What is materiality under New Zealand’s climate standards?
Materiality is a central concept within NZ CS 3.
Entities need to consider whether climate-related information is sufficiently important that its omission, misstatement or obscuring could reasonably be expected to influence decisions of users of the disclosures.
Q39. Does New Zealand use double materiality like the EU?
Not in the same way as the EU’s CSRD/ESRS framework.
New Zealand’s climate standards focus primarily on climate-related information relevant to users assessing the entity’s prospects and decision-making.
Q40. Is broader social and governance ESG reporting mandatory?
There is no single comprehensive mandatory ESG framework covering all environmental, social and governance topics for every New Zealand company.
The principal mandatory sustainability regime is focused on climate-related disclosures.
Other laws may separately regulate employment, health and safety, environmental matters, corporate governance, human rights and other issues.
Q41. Can companies voluntarily report broader ESG information?
Yes.
Companies can voluntarily provide additional information on:
- Diversity
- Employee welfare
- Human rights
- Biodiversity
- Water
- Circular economy
- Community impact
- Business ethics
- Governance
However, voluntary reporting should be accurate and properly supported.
Q42. What is greenwashing?
Greenwashing occurs when an organization makes environmental or sustainability claims that are misleading, exaggerated or unsupported.
Reliable data, clear methodologies and appropriate evidence are therefore essential.
Q43. What role does the FMA play?
The FMA is responsible for:
- Monitoring
- Supervision
- Enforcement
- Guidance
- Regulatory oversight
of the climate-related disclosure regime.
Q44. What role does the XRB play?
The XRB develops and maintains the climate standards.
Its standards form the technical foundation for the climate statements required under the legislation.
Q45. What role does the CFO play in climate reporting?
The CFO can play a central role in:
- Climate data governance
- Carbon accounting
- Financial impact assessment
- Scenario analysis
- Internal controls
- Risk management
- Disclosure review
- Assurance coordination
Climate reporting increasingly connects sustainability information with financial decision-making.
Q46. What role can accountants and auditors play?
Accounting and assurance professionals can support:
- GHG measurement
- ESG data controls
- Climate reporting
- Assurance
- Risk assessment
- Financial impact analysis
- Documentation
- Internal audit
Q47. What role can CMAs and management accountants play?
Management accountants can translate climate information into financial and operational decisions.
Their contribution may include:
- Carbon costing
- Climate-related budgeting
- Investment appraisal
- Scenario analysis
- Sustainability KPIs
- Performance measurement
- Management dashboards
- Risk analysis
Q48. What should a New Zealand company do to prepare for climate reporting?
A practical readiness plan should include:
- Determine whether the entity is a Climate Reporting Entity.
- Monitor the changing statutory thresholds.
- Establish board and management responsibility.
- Identify climate-related risks and opportunities.
- Develop Scope 1 and Scope 2 inventories.
- Assess relevant Scope 3 emissions.
- Establish ESG and climate data controls.
- Document methodologies and assumptions.
- Integrate climate risks into enterprise risk management.
- Prepare for independent GHG assurance.
Q49. What is the future of climate reporting in New Zealand?
New Zealand’s climate reporting framework is currently at an important transition point.
The Government proposed narrowing the regime in 2025, while the legislation to implement those changes had not passed by late 2026. The FMA has consequently provided interim no-action relief to affected entities.
Meanwhile, the XRB is reviewing the longer-term direction of New Zealand’s climate-reporting standards. Its October 2026 roadmap consultation considered a proposed future direction and a possible mandatory application date of 1 January 2033, but the consultation has closed and no final decision has yet been made.
Q50. How does New Zealand’s ESG reporting framework compare with other countries?
New Zealand was an early adopter of mandatory climate-related financial disclosure.
Its approach differs from:
European Union: The EU has a broader sustainability-reporting framework covering environmental, social and governance matters under CSRD/ESRS.
United States: The U.S. framework is more fragmented, combining securities regulation with state-level requirements.
Canada: Canada has a combination of securities requirements, voluntary ISSB-aligned standards and mandatory climate-risk requirements for federally regulated financial institutions.
Malaysia: Malaysia is implementing a broader ISSB-based sustainability-reporting framework through its NSRF.
New Zealand: New Zealand has historically focused strongly on mandatory climate-related financial disclosures for specified entities, supported by legally established climate standards.
Conclusion
New Zealand is an important example of how a country can introduce mandatory sustainability reporting by beginning with climate-related financial disclosures rather than immediately imposing a comprehensive ESG reporting law.
The framework is built around three Aotearoa New Zealand Climate Standards:
- NZ CS 1 – Climate-related Disclosures
- NZ CS 2 – Adoption of Aotearoa New Zealand Climate Standards
- NZ CS 3 – General Requirements for Climate-related Disclosures
The existing legislation requires Climate Reporting Entities to prepare annual climate statements, make them publicly available and obtain independent assurance over the relevant greenhouse-gas emissions disclosures.
However, 2026 is a year of regulatory uncertainty. Proposed reforms would significantly narrow the scope of the regime by increasing the listed-issuer threshold to NZ$1 billion and removing managed investment scheme managers. Because those amendments had not been enacted, the FMA extended no-action relief for certain affected entities.
At the same time, the XRB is considering the longer-term future of New Zealand’s climate-reporting standards, including a possible future mandatory application date of 2033. That proposal remains under consideration and should not be treated as a final rule.
For CA, CMA, CPA, accounting and finance professionals, New Zealand’s experience demonstrates that climate reporting is increasingly becoming connected with mainstream corporate reporting, financial risk management, carbon accounting, assurance and strategic decision-making.
For Indian and international companies operating in New Zealand, the key lesson is equally important: monitor the legal scope, maintain reliable climate data and prepare for regulatory changes rather than relying only on today’s thresholds.
The Worldonomics Times will continue tracking mandatory ESG and climate-reporting developments across New Zealand, India, China, Malaysia, Canada, the United States, the EU and other major economies.