The coalition government has weakened New Zealand’s previously world-leading climate disclosure law, only months after officials presented it to the United Nations as proof of “significant progress” on climate action.
The climate-related disclosure (CRD) regime was established by the Labour-Green government in 2021. The law sought to integrate climate risk into standard business, investment, and lending decisions, moving it from sustainability reports into core financial accounting.
This makes New Zealand the pioneer country to mandate major banks, insurers, and listed companies to publicly disclose the potential financial impacts of climate change on their businesses.
When it took effect in 2023, the initiative was internationally praised as a benchmark for transparency.
The initial reports, released in early 2024, were designed to assist investors in identifying companies ready to navigate a warmer, more uncertain world. However, shortly after, companies argued that the regime was too expensive and complicated.
Turners Automotive reported that its first report, just seven pages, cost around $1 million to produce due to the development of new systems to monitor the lifetime emissions of every car sold.
Other companies criticised the regime as being more burdensome than that faced by similarly sized Australian firms and expressed concerns about potential legal risks from disclosing climate information.
Although many companies spent less than Turners, some under $200,000, by handling the work internally, officials at the Ministry of Business, Innovation and Employment (MBIE) started consulting on amendments to the law.
MBIE published a discussion paper in late 2024 stating that the regime’s costs were excessive. Earlier this year, ministers were reviewing proposals to reduce by half the number of companies obligated to report.
Those plans were confirmed today as the government announced major changes, including raising the reporting threshold for listed companies from $60 million to $1 billion in market value.
All 22 KiwiSaver and investment-scheme managers were also exempted, reducing the number of entities required to make climate-related disclosures to just 76, down from 164.
According to Commerce and Consumer Affairs Minister Scott Simpson, the change was intended to boost business growth and strengthen New Zealand’s capital markets. He acknowledged that although the law’s intentions were sound, the regulations turned out to be “too onerous” and had discouraged potential companies from listing.
For Lawyers for Climate Action NZ executive director Jessica Palairet, the decision was “short-sighted.”
“New Zealand led the world by introducing the first climate-related disclosures regime in 2022,” she said.
“We now have the dubious nod of likely becoming the first country in the world to weaken our climate-related disclosures regime, just two years into its adoption and without strong evidence that this is necessary or will strengthen our capital markets.”
Palairet argued that the rollback incorrectly portrayed transparency as detrimental to growth and caused the country to fall out of alignment and become less inclusive compared to key partners, including Australia.