Source: New Zealand Government
The Government is making further changes to support business growth and New Zealand’s capital markets, says Commerce and Consumer Affairs Minister Scott Simpson.
“Mandatory climate reporting has imposed heavy costs on listed businesses. Some entities tell me they have spent up to $2 million on compliance, money they would rather invest in practical emissions reductions such as electric vehicles,” Mr Simpson says.
“I have also heard that the cost and risk associated with climate reporting may be deterring listings. Since 2020, 34 companies have listed on the NZX, six of which were IPOs, while 37 have de-listed. To future proof our markets, we need to ensure listing remains an attractive option for raising capital in New Zealand.”
Our first step was to make forward-looking financial information optional for NZX listings. That change took effect in June and reduces costs for companies considering a listing. Now we’re making common-sense adjustments to the climate reporting regime so it is fit for purpose.
Mr Simpson says the Government will:
Lift the mandatory climate reporting threshold for listed issuers from $60 million market capitalisation to $1 billion, striking a better balance between the regime’s aims and maintaining a healthy, competitive market.
Adjust director and company liability settings to reduce unnecessary risk and cost while preserving robust climate disclosures.
Remove managed investment schemes from the climate reporting regime, reflecting feedback from fund managers and investors that these disclosures are not useful for investment decisions in those products.
“Climate reporting was introduced by the previous Government, and New Zealand was first in the world to require it. While the intentions were solid, the rules proved too onerous and have become a deterrent for potential listers. It made sense to review these after the first year of reporting. We have listened to the feedback, examined how the regime operates in practice, and are now resetting the settings accordingly.
“Together, these changes will ensure the right entities are reporting, the regime is not making it harder for Kiwi firms to do business, and the information produced remains robust and useful.”
Mr Simpson says the decisions follow consultation earlier this year on climate reporting changes and on proposals to encourage more KiwiSaver investment in unlisted assets.
“We heard there is a clear need for better public information about unlisted investments at the fund level. The current lack of visibility makes it hard for investors to see how and where their savings are invested.
“To address this, we will require clearer reporting on how investments are split between public and private markets, and between New Zealand and overseas assets. These requirements will apply to KiwiSaver and other managed funds.
“Greater transparency is an important step toward increased private asset investment. Globally, more capital is moving into unlisted assets, and we are seeing the same trend here. Better information will help investors understand these opportunities.”
Notes to editors:
This legislation will be passed as part of the Financial Markets Conduct Amendment Bill.
The Finance and Expenditure Committee will consider this as part of their extended report back.