As part of the Task Force on Climate-related Financial Disclosures (TCFD) regime, elements of the disclosures relating to greenhouse-gas emissions will be required to have independent assurance. This aspect of the New Zealand rollout has caused consternation among reporting entities given the lack of breadth and depth in the local assurance industry.

Having been referred to the parliamentary Economic Development, Science and Innovation Committee for scrutiny as the bill progresses through parliament – and submissions heard – amendments will be made to allow an extra two years for the requirement that reporting entities arrange external assurance for their greenhouse-gas emissions. This means assurance will be required within three years of the bill passing.

Nicola Swan, partner at Chapman Tripp, says this is a practical change to a problem that cannot be solved quickly. “A section of the bill had to do with creating a new assurance regime and regulated body that would have to be set up from scratch. But there was not sufficient support that assurance would provide real benefit in the early years of this new regime. This will certainly become a requirement in the next few years.”

The External Reporting Board (XRB) is yet to determine whether limited or reasonable assurance will be required under the new regime, says April Mackenzie, chief executive at the XRB. “We also need to undertake an exercise with current and emerging practitioners so we can understand the extent to which independence and quality-management standards currently exist and whether they are fit for purpose in this space,” she comments.

Though the legislation focuses on one part of the climate statement – greenhouse-gas emissions – Mackenzie says policymakers anticipate assurance is likely to expand right across the climate statement over time.

Other changes from TCFD are the exclusion from new reporting requirements of issuers with market capitalisation of less than NZ$60 million (US$42 million) – though these account for just 0.68 per cent of the New Zealand Exchange’s total market capitalisation. Growth markets and small issuers listed on other exchanges will also be excluded. T

The licencing regime for ‘climate-related disclosures assurance bodies’ to regulate assurance practitioners has also been removed, as well as disclose-or-explain provisions.