The External Reporting Board (XRB) has approved three of the four proposed amendments to the Aotearoa New Zealand Climate Standards (NZ CS) following its October consultation (summary available here). 

The changes will apply to accounting/reporting periods beginning on or after 1 January 2024.

More time for complex disclosures

The XRB has approved one-year extensions for the following disclosure requirements:

• Scope 3 GHG emissions: Climate Reporting Entities (CREs) will have until their third reporting year to start disclosing their Scope 3 emissions (and make related comparatives disclosures). This includes one-year extensions for reliance on the following NZ CS 2 adoption provisions: 
  • Adoption provision 4: Requirement to disclose Scope 3 GHG emissions (NZ CS 1 paragraph 22(a)(iii)).
  • Adoption provision 5:  Requirement to disclose comparative information for Scope 3 emissions for the immediately preceding two accounting periods (NZ CS 3, paragraph 40).
  • Adoption provision 7: Requirement to disclose an analysis of the main trends evident from a comparison of the Scope 3 GHG emissions from the previous accounting periods to the current accounting period (NZ CS 3 paragraph 42).
• Financial impact analysis: CREs will now have until year three to disclose the anticipated financial impacts of their identified climate-related risks and opportunities.
• Assurance requirements: CREs will no longer need to obtain external assurance on Scope 3 emissions for accounting periods ending before 31 December 2025. This will give CREs more time to get the right processes in place, leading to greater reliability and accuracy of reported data.

No extension for transition planning 

The XRB has not extended the original timeframe for transition planning due to strong feedback from stakeholders wanting access to transition planning information. CREs will need to disclose transition planning in their second reporting period. This may prove challenging for some CREs, but the XRB has indicated that it is not expecting “a fully-fledged, certain and finished ‘plan’.” ^[1]

Looking ahead

1. Focus on transition planning: With no extension, CREs should prioritise transition planning going into their second reporting period. 
2. New XRB guidance: The XRB is developing further guidance on GHG reporting, expected in December.
3. FMA consultation: Before the end of 2024, the Financial Markets Authority (FMA) intends to consult on the possibility of a class exemption for delaying assurance of Scope 3 GHG emissions disclosures.  

Our view

These changes reflect the XRB's balanced approach between giving businesses adequate preparation time and meeting stakeholders' needs for accurate and reliable disclosures. 

In October, we released guidance on preparing for year two of climate reporting, including guidance on transition planning. If you need support understanding these changes or preparing your climate-related disclosures, our expert team can help.

Special thanks to Isabel Van Tuinen for her assistance in writing this article.