At a time when climate risks are increasingly manifesting as severe economic damage, the proposal to significantly shrink coverage of the regime, and remove applicability to managed investment scheme managers altogether, is likely to undermine investor confidence in New Zealand businesses.
Raising the reporting threshold for listed equity and debt issuers from NZ$60 million to NZ$1 billion will exclude a substantial portion of the economy from climate reporting obligations. This change removes critical transparency into how a wide range of companies are managing financially material climate risks, including those in sectors vulnerable to transition and physical impacts.
Investors rely on consistent, comparable disclosures across the market to allocate capital efficiently and to assess systemic risk. A significant reduction in the number of reporting entities will fragment the data landscape and hinder informed investment decisions. It also risks local firms’ access to global capital markets.
The wholesale removal of Managed Investment Scheme (MIS) managers from the regime is also troubling. These entities manage approximately NZ$230 billion in assets—capital that is exposed to climate-related risks and opportunities. Pre-empting refinements XRB indicated were under consideration to make the regime suitable for investors and smaller entities Is a radical step that weakens stewardship and accountability across the financial system.
Of further concern are the proposed changes to evidentiary settings. Lowering the evidentiary standards for climate disclosures is likely to result in lower-quality analysis, disclosures, and increase the risk of greenwashing. It also sends a signal that climate risk does not create financial risk, which is not borne out by the evidence.
These changes come at a time when reporting entities have only recently built capacity to meet the current requirements. Altering the regime now creates unnecessary uncertainty and disrupts the momentum toward better climate governance, contrary to preference of global and New Zealand investors. The recent State of Net Zero Aotearoa report found that well over a third of local and global investors specifically identified policy uncertainty as an obstacle to implementation of climate investment practices. 85% report engaging in climate policy advocacy, indicating that investors see stable, forward-looking climate policy as essential to protecting long-term value.
The proposed changes also risk isolating New Zealand from international best practice, particularly as jurisdictions such as Australia, the EU, and the UK move toward stronger, more comprehensive climate disclosure frameworks aligned with ISSB and TCFD standards.
IGCC urges the New Zealand Government to reconsider these changes and to maintain a strong, credible climate disclosure regime. Investors need transparency, consistency, and accountability to manage climate risk, and support the New Zealand businesses that will be creating jobs, growth and economic prosperity now and into the future.
Weakening the regime now would be a step backward—one that New Zealand, its businesses, and its investors cannot afford.