Developed, built and supported exclusively for New Zealand and Australia
New Zealand’s Climate-related Disclosures (CRD) regime defines clear and actionable expectations for climate transparency and governance. Established by the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021, the CRD regime appoints the External Reporting Board (XRB) to set the climate standards (NZ CS1-3) and the Financial Markets Authority (FMA) to enforce them. Large issuers, banks, insurers, and other entities regulated by the Financial Markets Conduct Act must now provide material, decision-useful information addressing governance, strategy, risk management, and performance in response to climate change.
The regime adopts global frameworks like TCFD and ISSB, customized for New Zealand through the XRB’s Aotearoa New Zealand Climate Standards. With transparent regulation and robust standards, organizations deliver information that strengthens resilience, enhances market access, and builds stakeholder trust in the climate-focused economy.
CRD are a set of mandatory disclosures that large New Zealand entities must include in their Annual Reports as part of their statutory reporting obligations. The disclosures are designed to provide insight into an entity’s exposure to and management of climate-related risks and opportunities over varying time horizons.
These disclosures provide assurance to investors, regulators, and stakeholders about how an entity is preparing for foreseeable climate impacts and participating in the transition to a low-emission economy.
The Climate-Related Disclosures (CRD) regime in New Zealand carries significant legal and regulatory importance. It is a mandatory requirement for relevant entities under the country’s updated financial and corporate law framework. Directors hold direct accountability for ensuring that disclosures are accurate, complete, and delivered on time, with civil penalties and reputational risks applying in cases of non-compliance or misleading statements. Oversight rests with the Financial Markets Authority (FMA), which enforces CRD obligations and maintains publicly accessible registers of lodged climate statements, ensuring transparency.
Beyond its regulatory foundation, CRD aligns closely with investor expectations and prevailing market trends. Investors and lenders worldwide are integrating climate risk assessments into capital allocation decisions, and organisations that demonstrate transparent reporting gain improved access to green finance, sustainable investment funds, and capital linked to credible ESG performance. In turn, public confidence in the ethical and sustainable operations of businesses increasingly influences customer choices, supplier relationships, and strategic partnerships.
The value of CRD extends well beyond compliance obligations. By embedding climate considerations within business decision-making, it strengthens risk management and enhances strategic foresight. It also opens avenues for innovation, improving resilience, operational efficiency, and long-term competitive positioning. Most importantly, transparent disclosures foster stakeholder trust by demonstrating sound governance and accountability in the face of climate-related challenges.
In New Zealand, the Climate-Related Disclosures (CRD) rules apply to specific financial and listed organisations. These include companies listed on the NZX, banks, deposit takers, insurers, large superannuation schemes, and other major financial market participants that meet certain financial thresholds. The Financial Markets Authority (FMA) is responsible for ensuring these organisations -known as climate reporting entities (CREs) – are properly registered and that they meet their reporting obligations.
The scope of entities subject to mandatory CRD has been significantly reduced following Government reforms announced in October 2025. The total number of Climate Reporting Entities (CREs) has reduced from approximately 164 to 76, primarily through the removal of managed investment schemes and a substantial increase in the listed issuer threshold. These changes are being legislated through the Financial Markets Conduct Amendment Bill, expected to pass in 2026.
Organisations are required to report using the XRB Climate Standards, which cover five main areas. Governance disclosures explain how boards and management oversee climate-related risks and opportunities. Strategy requires organisations to set out how climate change is already affecting them, as well as how it could influence their future operations and plans. Risk management reporting must detail how climate-related risks—ranging from acute physical events such as extreme weather to transitional challenges in moving toward a low‑carbon economy—are identified, assessed, and managed. Metrics and targets include disclosure of greenhouse gas emissions, covering direct, indirect, and supply‑chain sources, along with information on progress towards defined climate targets. Finally, scenario analysis requires organisations to model how different possible climate futures could impact their business strategy and financial resilience.
These disclosures form part of a company’s Annual Report and are filed with the Companies Office or another relevant regulator according to standard financial year deadlines. The system is being rolled out in stages, which allows businesses to begin with simpler disclosures and then add more detail in subsequent reporting years.
Emissions must be measured in line with the Greenhouse Gas Protocol, the globally recognised standard. Organisations are expected to clearly define the boundaries of the operations being reported, ensure data is well‑documented, and present information that is reliable, consistent, and capable of being independently verified.
Directors hold ultimate responsibility for the accuracy and proper preparation of disclosures. This makes sound governance structures and robust internal controls essential to maintaining the trustworthiness of reported information. Independent limited assurance of disclosures is required Year 1. Companies that engage assurance providers early are better placed to strengthen the credibility of their disclosures, build investor confidence, and manage regulatory expectations effectively.
As climate reporting obligations under the Climate-Related Disclosures (CRD) regime expand, many organizations struggle to move beyond compliance toward reporting that genuinely serves their business. The best climate disclosures don’t just satisfy regulators – they strengthen governance, build investor confidence, and reveal new opportunities for growth. Learning from common pitfalls can help transform disclosure from burden into competitive advantage.
The most fundamental error is misunderstanding what effective climate reporting can achieve:
Weak governance structures undermine the credibility and effectiveness of climate disclosures:
Poor data infrastructure creates accuracy problems that surface painfully during assurance processes:
Technology choices can amplify data challenges in predictable ways:
Ambitious targets without proper foundation create credibility problems:
Generic approaches fail to generate meaningful business insights:
Late engagement with assurance providers creates predictable problems:
Poor communication undermines even technically excellent reports:
Poor editorial judgment reduces the impact and usefulness of disclosures:
Over-reliance on external support creates hidden vulnerabilities:
To avoid these pitfalls and maximize the value of climate-related disclosures:
Climate-related disclosures represent an opportunity to build genuine resilience, sharpen strategic thinking, and strengthen stakeholder relationships. Organizations that avoid these common pitfalls can transform disclosure from burden into competitive advantage.
Preparing credible climate disclosures is complex, but our audit-proven system makes it simpler and more reliable. Purpose-built for XRB-aligned CRD, it delivers full traceability, automated carbon data management, and regulator‑ready reports that withstand assurance scrutiny.
CRD applies to Climate Reporting Entities (CREs). These include:
Note: Significant changes to the CRD regime were announced in October 2025. The Government confirmed a substantial narrowing of scope, with the Financial Markets Conduct Amendment Bill expected to legislate these changes in 2026. The FMA has taken a “no action” approach for affected entities from 1 November 2025, meaning it will not enforce obligations against entities whose reporting requirements are expected to cease under the new settings.
Under the updated regime, CRD applies to the following Climate Reporting Entities (CREs):
Managed investment schemes (MIS) have been removed from the regime entirely, regardless of assets under management. These changes reduce the total number of reporting entities from approximately 164 to 76.
Director liability settings have also been adjusted: deemed personal liability for directors has been removed, and a reduced evidentiary standard now applies to climate disclosures, acknowledging that climate reporting involves forward-looking and uncertain information rather than historical financial data.
Entities that remain in scope continue to report under the XRB Climate Standards (NZ CS 1–3).
Disclosures under the Climate-Related Disclosures (CRD) regime must follow the Aotearoa New Zealand Climate Standards, issued by the External Reporting Board (XRB). These standards require organisations to address five key areas. Governance reporting explains how boards and management oversee climate-related risks and opportunities. Strategy disclosures describe both the actual and potential impacts of climate risks and opportunities on the organisation’s business model, strategy, and financial planning. Risk management requires outlining the processes used to identify, assess, and manage climate-related risks. Metrics and targets must include the measurement of greenhouse gas emissions across Scope 1, Scope 2, and material Scope 3 categories, as well as any adopted reduction or adaptation targets. Finally, scenario analysis requires organisations to test their resilience against a range of possible climate futures, considering both physical and transition risks
Entities with reporting periods beginning on or after 1 January 2023 must produce CRD‑compliant disclosures in their annual reports, with the first reports released from 2024 onwards.
Yes. Under New Zealand’s Climate-Related Disclosures (CRD) regime, assurance is required for greenhouse gas emissions disclosures. From 2024 financial years onward, in-scope entities must have their Scope 1, Scope 2, and material Scope 3 emissions assured by a qualified assurance provider. The Financial Markets Authority (FMA) oversees compliance with this requirement.
While only emissions disclosures carry a formal assurance obligation at this stage, regulators have signalled that the scope of assurance may expand in future years. Organisations that build assurance readiness into their processes now are far better placed to adapt as requirements evolve.
Engaging assurance providers early is strongly recommended. Leaving assurance until the end often results in costly findings, delays, and rework. By contrast, companies that invest in audit-proven systems with reliable, transparent data make assurance more straightforward, reduce risk, and build confidence with both regulators and investors.
No, CRD is not a voluntary initiative but a regulated compliance regime. It requires mandatory and prescriptive disclosures that form part of an organisation’s annual report, making them subject to both audit and legal liability. Non‑compliance carries regulatory consequences, underscoring the seriousness of the framework. While voluntary sustainability or ESG reports can complement CRD by providing additional context or detail, they are not a substitute for meeting the required obligations.
The FMA enforces CRD requirements. Potential consequences include:
Initially, regulators are focusing on uplifting quality and capability. Over time, deliberate or repeated non‑compliance will attract tougher enforcement.
CRD is based on the Task Force on Climate‑related Financial Disclosures (TCFD) framework, making New Zealand standards internationally consistent and relevant for global investors.
XRB – develops and issues the mandatory climate standards (Aotearoa New Zealand Climate Standards).
FMA – monitors disclosures, enforces compliance, and provides guidance on expectations.
Practical steps are emerging to help organisations lift the quality of their climate-related disclosures. Educating boards and executives on climate governance is an essential starting point, ensuring leadership is able to provide effective oversight. Strengthening climate data collection and improving emissions measurement, particularly for Scope 3, helps build a more complete and reliable picture of organisational impact. Running pilot scenario analyses and stress tests allows businesses to better understand their resilience under different climate futures, while engaging early with assurance providers reduces the risk of last‑minute challenges. Finally, aligning climate disclosures with financial statements ensures consistency and credibility, reinforcing trust with investors, regulators, and stakeholders.
Scope 3 emissions are indirect greenhouse gas emissions from a company’s entire value chain – including suppliers, business travel, product use, and waste. They typically represent 70-90% of an organization’s total carbon footprint, making them crucial for understanding true climate impact.
Assurance Requirements:
Disclosure: Scope 3 reporting becomes mandatory in an entity’s third year of climate reporting under NZ Climate Standards
Assurance: Independent assurance of Scope 3 emissions is required for accounting periods ending on or after 31 December 2025 – but only if you’re already reporting them
Key Point: If you’re voluntarily reporting Scope 3 emissions before it becomes mandatory, you’ll need to have them assured once the 2025 deadline applies
Entities must disclose Scope 3 emissions where they are material to understanding their climate risks and opportunities.
Smaller entities not captured as CREs do not have to comply. However, many will face requests for climate data from customers, financiers, or supply chains, and may find voluntary alignment with CRD beneficial.
A number of weaknesses continue to undermine the quality of climate-related disclosures. Too often, organisations rely on generic, boilerplate statements rather than providing entity‑specific insights tailored to their business context. Scenario analysis also tends to be underdeveloped, with limited quantification that reduces its usefulness for strategic planning. In many cases, climate risk reporting remains poorly integrated with financial disclosures, creating an incomplete picture for investors and stakeholders. Finally, there is frequently a lack of clear processes for verifying data – particularly Scope 3 emissions – reducing both credibility and assurance readiness.
Costs: data collection, consultancy, scenario analysis, board training, assurance readiness
Costs and time in preparation can be reduced by as much as 95% using carbon accounting software like BraveGen.
Benefits: investor confidence, reputational resilience, better risk oversight, and stronger positioning in a low‑carbon economy
