Producing climate statements is a big task and one that was foreign for many CREs before this year. Even those who had made disclosures under the voluntary Taskforce for Climate-related Financial Disclosures framework found mandatory climate-related disclosures a big step up.

Developing a comprehensive reporting plan ensures CREs complete all necessary tasks systematically and effectively and helps to identify and mitigate any potential reporting challenges they might face early on. It also allows time to verify the accuracy of information gathered to ensure that disclosures are substantiated, robust, and fairly presented. 

The reporting plan should outline timelines, responsibilities, resource allocations, governance, and accountability, allowing adequate time for the more intensive or technical reporting aspects such as scenario analysis, measuring GHG emissions, and transition planning. This approach should help CREs avoid having to draft disclosures right up to the last minute and ensure that every aspect of the reporting process receives sufficient attention and generates maximum value. A structured and well-resourced plan also enables business units throughout the wider organisation to manage workloads effectively and target information gathering and reporting, reducing strain on staff.

The climate reporting process is time and resource intensive. CREs should build dedicated time into their reporting plan for the core climate reporting team to analyse insights and disclosures before finalising the climate statements for publication.

This allows for a deeper understanding of the CRE’s climate impact and goals and enhances the coherency of the final statements, improving overall disclosure quality and making insights more constructive.

In our experience, CREs who had a concrete plan for undertaking reporting, and had allocated sufficient time and resources, gathered more targeted information, generated more value from the process, and had more time to consider what to disclose, resulting in final climate statements that better reflected their material climate-related risks and opportunities.

CREs need to involve the right people in the reporting process, both experts from operational teams and governance body members and management. The governance body and management team need the skills and knowledge to understand and oversee the identification, assessment, and management of climate-related risks and opportunities. For many CREs, the first year of reporting highlighted knowledge gaps at the governance and management levels on the nature of climate-related risks and opportunities, how to identify them, and how best to mitigate risks and leverage opportunities. 

For year two, CREs should target those gaps in knowledge and upskill and educate their reporting personnel (and anyone else within the organisation who may be feeding core information into the reporting process) on climate-related risks and opportunities and climate change generally. This will empower individuals to contribute meaningfully to the reporting process and ensure personnel are well-equipped to undertake key materiality assessments to determine what to disclose. Training and learning resources are available in a number of places. Both the Institute of Directors and the Climate Governance Initiative offer courses that are tailored to governance level personnel in organisations and are a great resource if looking to upskill an entire team, and there is also a wealth of resources at Chapter Zero New Zealand for directors.

Some climate statements contained general ESG and sustainability information. While CREs may be tempted to highlight their sustainability efforts, the focus of the NZ CS is solely on climate. Including ESG information in climate statements dilutes the focus on climate accountability and undermines the purpose of the NZ CS. ESG and sustainability disclosure is still valuable but should be in addition to, not a substantive part of, climate statements.

NZ CS requires disclosure of all “material” information (as defined in NZ CS 3). Establishing a clear materiality framework is essential to help CREs systematically identify and prioritise the most significant climate-related issues for their operations, primary users, and other stakeholders. While financial materiality thresholds are common in financial reporting and standard business risk/opportunity assessments, many CREs have not yet developed a comprehensive materiality framework for climate-related disclosures. A robust materiality framework which considers both qualitative and quantitative factors will ensure that CREs only disclose their key risks and opportunities, streamlining the reporting process and enhancing the relevance of information disclosed.

Acknowledging and understanding who the primary users of climate statements are can also help in determining what information is material. Although not a requirement in the NZ CS, few CREs acknowledged the target audience of climate statements - primary users. Primary users are defined as a CRE’s existing and potential investors, lenders, and creditors. 

Clearly identifying primary users and acknowledging the purpose of climate statements will help CREs tailor their statements to specific concerns and expectations primary users may have, increasing the relevance of the information provided and fostering a collaborative approach to climate-related challenges. 

Identifying and thoroughly analysing a CRE’s value chain involves examining every stage of the production, marketing, and delivery process to identify areas which present climate-related risks and opportunities. Fully understanding their value chain allows CREs to manage risk better, optimise operations, and implement effective response strategies. It also encourages collaboration with suppliers and customers, driving broader climate action throughout the value chain.

We believe that many CREs would benefit from deeper analysis of their value chain. As global climate reporting requirements increase, value chain mapping is becoming essential to operating in global markets. In-depth value chain analysis now will give New Zealand exporters a head start in global markets.