Chapter 1: Purpose of consultation
The Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 (CRD Act) introduced a new climate-related disclosures regime in New Zealand. This consultation document seeks feedback on 2 issues related to the assurance requirement in the CRD Act.
1.1 Two issues for feedback
The CRD Act imposes obligations on large financial market participants to disclose information about their climate-related risks and opportunities in annual climate statements. The disclosures in the climate statements regarding greenhouse gas (GHG) emissions must be independently assured from the second year of reporting. The CRD Act does not require any other disclosures to be the subject of an assurance engagement.
We are seeking feedback on 2 assurance-related issues in this consultation document, namely:
- Whether we should introduce an occupational licensing regime for the practitioners carrying out the assurance over the disclosures, referred to as “CRD assurance practitioners” (Issue 1).
- Whether we should extend the scope of the assurance requirement from the current obligation to assure GHG emissions disclosures only, to assurance over all disclosures in the climate statement (Issue 2).
One of the key objectives of the climate-related disclosures regime is to drive smarter, more efficient allocation of capital that helps smooth the transition to a more sustainable, low-emissions economy. To achieve this objective, the regime established by the CRD Act is designed to ensure that the effects of climate change are routinely considered in business, investment, lending and insurance underwriting decisions. It does so by:
- making businesses prepare, and allowing others to access, information in climate statements about climate-related risks and opportunities the businesses face
- subjecting some of the information to assurance requirements.
This consultation document focuses on the assurance stage. It explores options for regulating people’s entry into, and operation within, the CRD assurance practitioner market and for expanding the information that must be assured. In considering these options, our primary objective is to find the best approach for enhancing the trust and confidence that readers of the disclosures have in the information that is disclosed. If the information is trusted, it is more likely to be useful and relied upon by readers of the disclosures when making decisions about capital allocation.
The trust we build in this information will support the CRD Act’s aim of ensuring routine consideration of the effects of climate change when making commercial decisions, driving smarter, more efficient allocation of capital that helps smooth the transition to a more sustainable, low-emissions economy.
1. Do you agree that we have set the right objective for considering Issues 1 and 2?
1.3 Process and timeframes
Consultation is open from 22 November 2022 – 10 February 2023. We welcome any submissions, comments, and questions that you may have. Following consideration of all submissions, we will undertake further analysis to inform policy decisions made by Cabinet. The below table provides an indicative timeframe for the next stages:
|Public consultation open
|November 2022 – February 2023
|Consideration of feedback and further policy analysis
|February 2023 - March 2023
|Brief Minister of Commerce and Consumer Affairs and Minister of Climate Change on policy proposals
|Ministers seek Cabinet agreement to policy proposals