In this publication we continue our series looking into NZX50 companies and their journey to adopt the Aotearoa New Zealand Climate Standards (NZ CS). We explore the disclosure of climate-related risks in financial statements and how auditors considered climate-related impacts in key audit matters (KAMs).
This report looks at NZX50 March 2024 reporters, the second wave to mandatorily prepare their climate-related disclosures (CRD) in compliance with the NZ CS issued by the External Reporting Board (XRB) after they became effective in January 2023. We analysed the first reporters to prepare mandatory CRDs in our December 2023 reporters publication.
This report follows our earlier analysis of March, June and July to December 2022, March, June to September and December 2023 reporters.
Developing a Climate Statement is a complex undertaking for any organisation. Preparation of compliant disclosures requires significant time, expertise and engagement across the business. We will continue to closely monitor NZX50 companies as they embark on, and progress in, their journey of applying the NZ CS.
Overall key findings (compared to March 2023 NZX50 reporters):
14 (2023: 13) businesses on the NZX50 with 31 March year ends have completed their financial reporting.
8 (2023: 6) reporters discussed the impact of climate-related risks in their financial statements.
3 (2023: 2) audit reports mentioned climate change in key audit matters (KAMs).
5 (2023: 4) businesses disclosed the use of green finance.
4 businesses discussed the 2023 extreme weather events in their financial statements (2 in the financial statements and 2 outside of the financial statements in the annual report).
2 businesses provided a limited historical quantification of the impacts of the 2023 extreme weather events in their financial statements, such as fair value adjustments on specific assets and insurance receivables. None of the businesses disclosed quantitative impacts from anticipated forward-looking effects of climate change.
Key findings from NZX50 March 2024 reporter's first mandatory climate-related disclosures (CRD):
10 reporters published their first CRD in accordance with the Aotearoa New Zealand Climate Standards at the same time as their financial statements.
3 reporters included their CRD in the annual report, 11 published as a separate document.
All of the reporters took the adoption provision (at least partially) of not quantifying the impact of risks and opportunities in their CRD statements.
2 reporters included some quantification of the impacts of climate risk (physical or transition risks) in their CRDs.
12 reporters had either reasonable or limited assurance on their reported GHG emissions.
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