Climate Reporting: Easing the Compliance Burden Without Losing Sight of the Goal  

Climate Reporting: Easing the Compliance Burden Without Losing Sight of the Goal  

Climate-related disclosure is part of the overall picture of managing climate impacts, risk and opportunities.  

Through the work our SHIFT Compliance consultants do to support clients, we understand how challenging the first year of mandatory climate reporting under the Aotearoa New Zealand Climate Standards was, and support adjustments to reduce the resource burden for smaller climate reporting entities (CREs).  

FMA released their December 2024 CRD Insights report setting out areas for climate reporting entities to focus on for future years of reporting. Among the many recommendations, specific areas that stood out were expectations around:

•  scenario analysis and its disclosure; and

• risks and opportunities disclosed need to be relevant and specific to the CRE and have been through a robust materiality assessment.

Shortly after the release of the FMA Insights Report, MBIE released their Consultation on Adjustments to the climate related reporting regime, and submissions closed on Friday 14 February 2025.

It was interesting to hear Samantha Barrass at the FSC breakfast speak in favour of higher thresholds for application of the regime. SHIFT prepared a submission in response to the MBIE Consultation. For clients needing support with climate reporting work or ESG more generally during this uncertain period, please reach out to Corinne McLean or Prue Tyler.

While we support reducing the resource burden of climate reporting for smaller entities, we are seeing climate impacts continuously making headlines. On the impact of climate crisis and insurance coverage in the United States, warnings have been sounding for some time of the potential financial crisis ahead. In December 2024, the US Senate Budget Committee considered a report on the climate-driven insurance crisis in the United States. You don’t have to read beyond the Executive Summary to find stark quotes such as this:

‘One thing is certain: unless the United States and the world rapidly transition to clean energy, climate-related extreme weather events will become both more frequent and more violent, resulting in ever-scarcer insurance and ever-higher premiums. This is predicted to cascade into plunging property values in communities where insurance becomes impossible to find or prohibitively expensive — a collapse in property values with the potential to trigger a full-scale financial crisis similar to what occurred in 2008. To avoid such a devastating fate, we must speed the transition to clean energy and eliminate carbon pollution. Climate change is no longer just an environmental problem. It is a looming economic threat.’ 

We know the 2008 financial crisis, although originating in the US housing market, negatively impacted all corners of the globe. And for those who weren’t around to experience it, The Big Short is an entertaining reminder of the failure to take risks into account.