Today, the FMA published an updated version of its Information Sheet on Scenario Analysis (Information Sheet), and a series of recorded presentations to support the Information Sheet. In this alert we set out the substantive changes.
A link to the FMA’s media release (which includes the links to the six recorded presentations) and Information Sheet can be found here and here.
Who should read this? Why?
Anyone involved in preparing climate statements for a climate reporting entity (CRE) should read the updated Information Sheet to better understand the CRE’s obligations for the Strategy disclosures within the XRB’s Aotearoa New Zealand Climate Standard 1 (NZ CS 1).
What does it cover?
The FMA have updated the Information Sheet in response to questions from CREs and industry bodies following the release of the initial version in July 2023.
Please see our previous alert where we discussed the initial version of the Information Sheet in greater detail (available here).
The two substantive updates are:
- Providing further information about the quantification of scenarios (the corresponding recorded presentation is available here); and
- The insertion of a diagram at the back of the Information Sheet which explains the relationship between the Strategy disclosures in NZ CS 1. The recorded presentation on this diagram is particularly helpful for explaining what is illustrated, available here.
Other minor amendments have been made to provide further clarification and context.
Our view
As one of the more challenging requirements in the NZ CS, further information about scenario analysis disclosures and what the FMA is looking for when determining compliance is always welcomed.
This Information Sheet should be read alongside the XRB’s Staff Guidance for Entity Scenario Development. While the XRB’s Staff Guidance supports CREs with the scenario analysis process itself, the FMA’s Information Sheet is about setting FMA’s compliance expectations for the scenario analysis disclosures. Both are equally important to be familiar with.
What next?
CREs will be preparing their first climate statements for release in 2024.
If you have any questions about the Information Sheet, NZ CS compliance or about the CRD regime generally, please contact one of our experts.
This article was co-authored by Hannah Cross, a Solicitor in our Banking and Financial Services team.
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