The Financial Markets Authority (FMA) has released its latest findings on how climate reporting entities (CREs) are meeting their obligations under New Zealand’s climate-related disclosure (CRD) framework.
The new insights report follows the first full year of mandatory reporting and outlines both recurring gaps and examples of more effective practices.
The CRD regime requires certain entities to report on climate-related risks and opportunities in line with the Climate Standards issued by the External Reporting Board (XRB).
The FMA’s review assessed compliance, identified areas for improvement, and provided guidance intended to strengthen future disclosures.
The regulator found a wide range in the quality of climate statements.
Reports with clearer governance structures, transparent emissions targets, and well-organised information – often presented through tables or appendices – generally required fewer amendments.
Some CREs supplemented their disclosures with sector analysis, case studies, or detailed hazard assessments, which improved clarity for users.
In contrast, the FMA noted several recurring shortcomings. These included descriptions of risks and opportunities that lacked entity-specific detail, inclusion of immaterial risks, and omission of relevant timeframes.
In some cases, disclosures relied solely on climate model averages, which the FMA said may mask significant outcomes such as drought risk or extreme rainfall.
A key emphasis for the next monitoring cycle is the robustness of CREs’ processes for identifying and assessing climate-related risks and opportunities (CRROs).
The regulator stressed that these assessments are central to the CRD framework, supporting both effective risk management and meaningful disclosures for investors and other stakeholders.
Gaps identified included impacts from events – such as those following Cyclone Gabrielle – that were not linked to a related risk, and opportunity descriptions that referenced industry-wide trends without explaining relevance to the specific organisation.
The report also addressed confusion about whether the Climate Standards focus solely on “climate change.”
The FMA confirmed that “climate” encompasses climate change but does not require attribution analysis to separate impacts caused by climate change from those that could occur without it.
While optional, such analysis can provide useful context for internal monitoring.
The FMA reminded CREs that any information included by cross reference – such as from sustainability or greenhouse gas inventory reports – is part of the climate statement and subject to the same compliance standards.
Boards remain responsible for this material, and NZ CS 3 requires clear identification of where mandatory disclosures are located when they appear in other documents.
For the second year of reviews, the FMA will focus on whether CREs have addressed earlier feedback, disclosed all material CRROs, complied with requirements that no longer have adoption relief, and obtained independent assurance over greenhouse gas emissions data.
The regulator plans to issue a monitoring report in mid-2026, but will also give verbal feedback to some entities – particularly those with December or March balance dates – to allow adjustments ahead of their third reporting cycle.
At the same time, the Insurance Council of New Zealand (ICNZ) has urged the government to introduce more decisive national policy on natural hazard risk management.
The call comes during consultation on the proposed National Policy Statement for Natural Hazards, intended to guide how risks such as flooding, landslips, coastal inundation, and sea-level rise are considered in land-use decisions.
ICNZ chief executive Kris Faafoi said New Zealand’s exposure to these hazards is increasing, and a more consistent approach would help councils prevent development in high-risk locations.
“We support the government’s focus on strengthening the planning system to deal with natural hazards. A strong, clear national policy will empower councils to control development in areas exposed to high hazard risk,” he said.
