The New Zealand Government has announced significant reforms to the climate-related disclosures regime (CRD Regime), which will reduce the number of climate reporting entities (CREs) from 164 to 76.
Separately, the government will make changes to KiwiSaver and other managed fund asset disclosure categories to more clearly distinguish between public and private market investments and whether assets are located in New Zealand or overseas.
Background to reforms
The announcement of the changes from the Minister of Commerce and Consumer Affairs, Scott Simpson, outlined the Government's view that changes to the CRD Regime are necessary to reduce compliance costs and remove a potential barrier to stock exchange listings. Further, the fund disclosure changes are expected to enhance public information about unlisted investments at the fund level.
These decisions follow the Government's consultation earlier this year on proposed changes to climate reporting and to encourage more KiwiSaver investment in unlisted assets.
CRD Regime changes
Key CRD Regime changes include:
- The climate reporting threshold for listed issuers will be raised from $60m to $1b in market capitalisation, and consequently the number of listed issuers who are captured will fall from 100 to 34
- All 22 current CREs that are managers of registered investment schemes, including KiwiSaver schemes, will be removed from the regime, due to feedback from fund managers and investors that the disclosures are not useful for making investment decisions
- Deemed director liability if a company breaches the climate reporting rules will be removed
- Directors and CREs will not have to show the same level of evidence for climate disclosures as for financial disclosures, recognising that climate reporting is more future focused and uncertain than financial disclosures, which draws on historical information.
Registered banks, credit unions, building societies and licensed insurers that are CREs will be unaffected by the changes.
Asset disclosure changes
New asset categories will be introduced under the Financial Market Conduct Regulations 2014 (FMC Regs), requiring fund managers, including KiwiSaver providers to disclose whether assets are in New Zealand or offshore and to distinguish between types of assets in accordance with new classes eg listed vs unlisted equities, private infrastructure, private debt, etc.
Next steps
Legislation to bring the above CRD Regime changes into effect will be passed in 2026. The FMC Reg amendments will take effect from March 2027. Buddle Findlay will continue to monitor legislative developments and publish updates on the same.
If you would like assistance with understanding the proposed changes or implications for your business, please contact a member of our financial services team.
This article was prepared by Andrew Suggate (Senior Associate) and Nicole McAnulty (Solicitor).
