The External Reporting Board (XRB) published a series of documents on Aotearoa New Zealand Climate Standards (NZ CS) today. These documents indicate the potential changes to NZ CS’s reporting model and guidance on transition planning.

Who needs to read it? Why?

All climate reporting entities (CREs) and Managed Investment Scheme (MIS) Managers required to report under NZ CS should read these updates. The documents will inform entities of the reporting model’s potential changes. They will also be relevant to those entities preparing for their second reporting period who can no longer use the adoption provision for transition planning.

What does it cover?

There are four categories of documents that were published.

Differential climate-related reporting

The XRB published a document on differential climate-related reporting. The document outlines the XRB’s intention to consult on the use of differential reporting in NZ CS. Under differential reporting, entities would have different disclosure requirements based on their category and size. The proposal arises from feedback the XRB received in its October 2024 consultation paper on NZ CS. Following consultation, the XRB intends for the differential standards to begin by December 2025 and to permit eligible CREs to adopt a differential standard for accounting periods that had commenced but not ended by that date. 

The full document can be found here. 

GHG scope 1 and 2 emissions clarification

The XRB and FMA have clarified that scope 1 and 2 greenhouse gas (GHG) emissions disclosures under NZ CS do not pertain to MIS Managers. Subsequently, no assurance engagement is required from MIS Managers for scope 1 and 2 GHG emissions. In its full clarification, the XRB has included a recommended paragraph for MIS Managers to include in their climate statements. The clarification can be found under the XRB FAQs here.

Climate transition planning

The XRB has published a suite of guidance documents on transition planning to support CREs. This is especially relevant as the adoption provision for transition planning cannot be used for CREs entering their second reporting period. The guidance includes:

• an overview to climate transition planning, available here;
• a guide for directors, available here;
• a guide for executives, available here; and
• the XRB staff guidance to transition planning disclosures, available here.

Consultation on the IPSASB exposure draft

The XRB is seeking input on its submission regarding an exposure draft by the International Public Sector Accounting Standards Board® (IPSASB). This exposure draft proposes a world-first global climate-related disclosure standard. New Zealand CREs and stakeholders are invited to provide input on the XRB’s submission. To access the exposure draft and provide input to the XRB, follow the instructions here. 

Our view

We welcome the XRB’s clarifications and guidance. We appreciate the XRB’s responsiveness to CREs’ queries and feedback on the standards, and its documents supporting CREs who will be including transition planning in their climate statements for the first time.

What next?

We will follow the developments on the differential climate-reporting model and observe the transition planning sections in climate statements of CREs in their second reporting year.

If you have any questions about these updates or compliance with the NZ CS, please contact one of our experts.

As we near the holiday shutdown period, the team at MinterEllisonRuddWatts wishes everyone a merry Christmas and happy New Year!

This article was co-authored by Summer Clerks Ivan Zhang and Edward Kruger