27 May 2021

Our Submission to the Financial Sector Amendment Bill

Posted in: Environmental news

Submission to the Economic Development, Science and Innovation Committee

Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill

At Toitū Envirocare, we have experience helping prepare greenhouse gas (GHG) emissions data for New Zealand-based entities that operate across more than 100 countries. Carbon assurance and reporting is what we do.

We support the purpose and breadth of the Financial Sector Amendment Bill (FSA Bill) and applaud the developments it signals that introduce climate reporting frameworks. The FSA Bill is an important legislative step that will bring greater transparency to the climate change risks our largest businesses face. Once in place, we believe the disclosure requirements built into this Bill will help businesses focus their attention on how they can best protect their own prosperity and enable New Zealand’s transition to a low-carbon economy.

We have prepared a submission to highlight a small number of specific areas where we consider the Bill has some unintended consequences and can be improved.

One effect of the legislation will be to mandate climate reporting entities to prepare climate statements that will require disclosure of greenhouse gas emissions, and to have those statements assured by a qualified CRD assurance practitioner (Part 461ZD). This is the core of Toitū’s work.

In its current form, the Bill could result in an assurance regime that:

  • is based on an accounting standard that most businesses currently do not obtain assurance against for greenhouse gas statements, and smaller assurance providers do not currently audit against;
  • would disadvantage smaller, more cost-effective, local assurance providers in favour of the big four global accounting firms;
  • would not recognise the Climate Leaders Coalition’s existing commitments; and
  • may not be consistent with reporting and assurance already occurring in the public sector.

Taken together, this could slow down the low-carbon transition as a result of climate reporting entities losing their investment in and experience gained from established, approved climate-related assurance programmes and paying higher compliance costs than they need to.

In our view, it is important that the emissions measurement and assurance standards currently being adhered to in New Zealand are actively supported, and do not end up being excluded through this legislation.

We expect our proposed changes would help to level the playing field, allow for continuity with current reporting practices and enable greater consistency across the private and public sectors. These changes would ultimately support a more affordable transition to a low-carbon economy and New Zealand achieving its carbon reduction goals.

We encourage you to consider submitting as well. Submissions close Friday 28 May and details are here.