The government of New Zealand announced a series of changes to its climate-related disclosure (CRD) regulation, including significantly raising the reporting threshold to exempt smaller companies from the scope of the compliance requirements, and reducing liability risk for company directors.

New Zealand launched its CRD regime in 2021, introducing requirements for banks, credit unions, insurers and investment scheme managers with over $1 billion (USD$575 million) in assets and issuers of listed equity or debt securities with market cap or face value of debt greater than $60 ($34.5 million) million to report annually on their climate-related risks and opportunities. Reporting under the regulation began in 2024, on the 2023 fiscal year.

According to Commerce and Consumer Affairs Minister Scott Simpson, the changes to the regulation come as “mandatory climate reporting has imposed heavy costs on listed businesses,” noting that some companies have said they spent up to $2 million on compliance. Additionally, Simpson said that climate reporting costs and risks may be deterring company listings, noting that only 34 companies have listed on the NZX since 2020, while 37 have delisted.

The proposed changes will lift the mandatory climate reporting market cap/debt face value threshold for listed issuers from $60 million to $1 billion, and will also remove managed investment schemes from the CRD. According to a government fact sheet, the update will reduce the number of reporting entities by about half.

The amendments will also remove personal liability for directors if their company breaks climate reporting rules, although directors and companies will still be liable for misleading or deceptive conduct or false or misleading statements. The government added that companies will not have to show the same level of evidence for climate disclosures as they do for financial disclosures, acknowledging that climate reporting involves future-focused and uncertain information, while financial reporting draws on historical information.

The government said that legislation to put the new changes into effect will be passed in 2026.

Simpson said:

“Climate reporting was introduced by the previous Government, and New Zealand was first in the world to require it. While the intentions were solid, the rules proved too onerous and have become a deterrent for potential listers. It made sense to review these after the first year of reporting. We have listened to the feedback, examined how the regime operates in practice, and are now resetting the settings accordingly.”