Foreword

The climate-related disclosures (CRD) regime encourages entities to consider short-, medium-, and long-term risks and opportunities while explaining potential implications for strategy and financial outcomes. Physical climate risk is of particular importance in Aotearoa New Zealand, as weather events increasingly translate into financial impacts. This report presents insights from reviews of climate statements for the second reporting period. Encouraging improvements across sectors were observed, including clearer report structures and improved reporting processes. Continued progress is required to refine disclosures so they focus on information most useful for primary users and align better with the purpose of the regime.

Executive summary

This report presents observations from the Financial Markets Authority (FMA) reviews of 62 climate statements for reporting periods ending between 31 December 2024 and 30 November 2025. Monitoring prioritised larger entities that have reported for two consecutive periods. The FMA has shifted from assessing if requirements were met on the face of disclosures to a more detailed assessment of whether disclosures are fairly presented and free from material misstatement. Entities are encouraged to strengthen disclosure practices to support transparency and trust in financial markets.

What we found

Many entities demonstrated clearer report structures, an uplift in the quality of greenhouse gas (GHG) emissions disclosures, and improved articulation of governance and risk management. However, recurring findings include unexplained inconsistencies between reporting periods and incomplete cross-referencing on the CRD register. Physical risk disclosures often lacked detail on how drivers translate into risk, frequently failing to link hazards to the specific assets or operations exposed. Additionally, there was insufficient disclosure regarding the extent to which targets rely on offsets.

Future focus

In the third year of monitoring, the FMA will continue an educative and constructive approach. Reviews will focus on key insights from this report and entity-specific feedback. Due to observations of physical risk disclosure weaknesses, there will be an increased focus on education regarding physical risks. This includes compiling a register of publicly available hazard data and conducting workshops to help entities assess appropriate methodologies and data outputs for evaluating hazards.

About our reviews

The reviews assess whether primary users receive information required by the CRD regime and provide feedback to enhance future disclosures. These insights relate to the second mandatory reporting period.

Purpose and scope

The FMA reviewed 62 climate statements using more comprehensive analysis than in the prior year. Feedback was provided through 26 individual meetings. The insights are limited to what was disclosed in climate statements, as the FMA did not request underlying disclosure records for this review period.

Insights

The report provides specific insights across four key focus areas identified for the second year of reviews.

Focus area 1: Improvements required from prior insights reports and individual feedback provided

Improvements were noted in report refining and the application of current climate-related impacts. However, some areas still require enhancement, such as incomplete filings on the CRD register for cross-referenced documents. Some entities incorrectly referred to prior-year statements to meet current-year requirements, which undermines completeness. Material inconsistencies between reporting periods and unclear cross-referencing to assured GHG disclosures also persisted.

Focus area 2: Disclosing all material information to explain climate-related risks and opportunities

Identification and assessment are central to the CRD regime. This year focused on physical risks and their anticipated impacts. The FMA engaged a climate scientist and found that data outputs relied upon for analysis were often not the most appropriate for the hazards being assessed. Disclosures frequently failed to explain how hazards result in damage or loss and lacked detail on the vulnerability of assets. The FMA recommends that entities progressively improve their understanding of climate hazard data and limitations in their current approach, including the use of high-resolution, location-specific data where available.

Focus area 3: First year of mandatory disclosure of current financial impacts and transition planning aspects of strategy

Most entities made reasonable efforts to comply with these new requirements. However, issues were identified regarding the omission of quantified figures for current impacts and a lack of coherency with financial statement disclosures. Transition planning disclosures sometimes lacked clear linkages between targets and material risks. The FMA notes that where no targets or actions exist to respond to material risks, this fact is itself material information that must be clear to users.

Focus area 4: Compliance with the requirement to obtain assurance over GHG emissions disclosures

While most entities obtained assurance, several examples of non-compliance with NZ SAE 1 were identified. Errors included referencing the wrong assurance standards, omitting required independence statements, and failing to include statements confirming the assurance organisation was not involved in preparing the GHG information. Unclear cross-referencing to GHG Inventory Reports made it difficult for users to determine which specific information had been subject to assurance.

Future monitoring activities

The FMA will continue to support compliance through an educative approach in the third year of monitoring. The focus will shift further towards assessing if disclosures are fairly presented. Significant matters will be addressed through formal feedback letters and ongoing engagement with industry bodies.

Updated future monitoring

A ‘steady state’ for monitoring is aimed for the fourth year, which will include proactive risk-based sampling. The FMA is awaiting confirmation regarding legislative changes to the CRD regime and international alignment developments, which may influence future monitoring approaches.

Voluntary reporting

Entities not meeting statutory thresholds that choose to publish voluntary statements should clearly identify any requirements with which they do not comply. While assurance is not mandatory for voluntary reporting, entities may still state compliance with NZ CS standards in the absence of an assurance opinion.

Appendix 1: How identification and assessment of climate-related risks and opportunities underpin the CRD reporting framework

The CRD regime is a disclosure regime that requires entities to undertake sufficient data collection and analysis to support transparent disclosures across the four pillars of the Climate Standards. The FMA evaluates whether these disclosures are free from material misstatement and can be reasonably relied upon by investors.