Of all the disclosure categories in Aotearoa New Zealand Climate Standard (NZ CS) 1, metrics and targets generally had the most detailed, topical, and comprehensive disclosures in the first year of reporting.

Climate-related metrics and targets reveal how climate reporting entities (CREs) measure and manage climate-related risks and opportunities and allow comparison of CREs within a sector or industry. While governance, strategy, and risk management are all critical inputs, metrics and targets provide transparency on climate-related performance and ambitions and the CRE’s progress on transitioning to a low-emissions and climate-resilient future. 

Core quantitative data includes scope 1, 2, and (unless an adoption provision is relied on) scope 3 GHG emissions, climate-related KPIs, remuneration linked to climate-related risks and opportunities, and climate-related capital deployment. 

Metrics and targets can demonstrate a CRE’s commitment to emissions reduction. Science-based or internationally aligned targets enhance a CRE’s credibility and demonstrate accountability, provided they are supported by appropriate actions. Targets also serve to benchmark progress and effectiveness over time.

In year one, CREs generally presented emissions and other metrics in a logical and coherent way, allowing straightforward comparison across climate statements (a key purpose of the metrics and targets disclosure). However, there are areas for improvement in year two.

Assumptions, limitations, and uncertainties are just as important as the underlying disclosures
The level of detail in describing key assumptions, limitations, and uncertainties underpinning the measurement of emissions in this year’s climate statements varied. CREs should make sure their approach meets best practice going into year two, as assumptions, limitations, and uncertainties are particularly important for scope 3 emissions, which can be challenging to measure and manage.
Ensure that your targets are fairly presented
With a global rise in “greenwashing” disputes, CREs should review the language and presentation of their climate statements, particularly when describing emissions-reduction and other climate-related targets. For example, if referring to net-zero targets or goals, the CRE should define what it means by ‘net-zero’, as there is no standard definition. The same applies when using terms such as “carbon zero” or “carbon neutral”. Failing to define these terms leaves the reader to choose their own interpretation and leaves the CRE vulnerable to accusations of inaccuracy.  Until New Zealand develops a green taxonomy, CREs need to define and communicate their carbon-related claims.
Be wary of referencing the SBTi without SBTi validation
CREs should be careful about describing their targets as aligned to the Science Based Targets Initiative (SBTi) if their targets have not been validated through the SBTi. The SBTi has strict standards and guidance for the validation of emissions reduction targets. CREs referencing the SBTi should choose their wording carefully to avoid giving the impression that the SBTi has validated their climate targets if this is not the case. Lack of clarity could put them at risk of greenwashing claims and have unintended reputational consequences.
Climate-related performance metrics
Many CREs disclosed performance incentives for broad sustainability milestones, but do not yet have specific climate-related KPIs. CREs should not imply sustainability KPIs are climate-related unless they directly relate to specific climate-related risks and opportunities.
Take a standardised approach to measurement
Consistency across measurement methodologies is crucial for accurately tracking progress and ensuring transparency. CREs should adopt a standardised approach to calculating and reporting emissions to facilitate comparison between years. This is also particularly important when measuring progress against targets. If methodologies change, CREs need to disclose how this may affect interpretation of GHG emissions or progress against emissions reduction targets.
Leverage industry-based metrics
Leveraging established industry metrics can enhance the credibility and comparability of climate statements. Industry-based metrics were under-used in year one. In year two, CREs should consider incorporating them into climate-related risk and opportunity management programmes. This integration will provide more climate data, helping the CRE and its primarily users better understand the CRE’s climate impact. Industry-based metrics can also make it easier to compare the CRE to its industry peers.

We can help with right-sized solutions. Please get in touch with one of our experts to discuss or speak with your usual Simpson Grierson contact to see how to take this forward. 

Special thanks to Isabel van Tuinen for her assistance in writing this series.