The Government has announced a series of reforms aimed at easing the regulatory burdens on business and revitalising NZ’s capital markets. One of the focus areas for these changes is the climate reporting regime, which has been criticised for imposing excessive compliance costs on climate reporting entities and deterring NZX listings.

In more detail:

1. Raising the reporting threshold for listed issuers: The mandatory climate reporting threshold for listed firms will be increased from a market capitalisation of $60 million to $1 billion. This change is intended to reduce compliance burdens for smaller NZX-listed firms, better balancing the regime’s environmental and climate objectives with the need to maintain a competitive and accessible market. The changes, if introduced, will mean that 66 listed companies and 22 managed investment schemes will no longer be required to make annual climate-related disclosures.
2. Adjustments to director and company liability for climate-reporting breaches: The Government is proposing to alter the liability framework associated with climate statements to reduce cost and risk for directors and companies, while preserving “robust climate disclosures”. This responds to stakeholder feedback that current liability settings may discourage good‑faith disclosures because of legal risk. If the proposed changes come into effect directors will no longer have personal responsibility (deemed liability) if their company breaches climate reporting rules, but directors and companies will remain liable for misleading or deceptive conduct or false or misleading statements.
3. Exclusion of managed investment schemes from the regime: Managed investment schemes will be removed from the mandatory climate reporting regime altogether. Feedback from fund managers and investors indicated that climate-related disclosures for these products were not materially useful for investment decisions.

Scott Simpson, the Minister for Commerce and Consumer Affairs, discussed the reasoning for these changes in a release here, noting:

“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”.

Specifically, Minister Simpson expressed concerns that the cost and risk associated with climate reporting may be deterring listings. He noted that: 

“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”.

We expect that these reforms will be welcomed by climate reporting entities, in particular the reduction of compliance costs. The raised threshold and liability adjustments will reduce the reporting burden for many listed firms and directors can take greater comfort knowing that they will not incur personal liability for forward-looking information in climate disclosures that is inherently uncertain and difficult to establish with certainty. 

Minister Simpson has noted that these reforms will be passed as part of the Financial Markets Conduct Amendment Bill (which will require an Amendment Paper to be introduced to Parliament for consideration). The Finance and Expenditure Committee will consider this as part of their report back to Parliament, which is due on 30 January 2026. 

We will be reviewing the Amendment Paper, to check that the detail of the reforms matches the policy intent, and will provide an update at that stage.

For our analysis of the wider reforms proposed in the Financial Markets Conduct Amendment Bill, please refer to our previous articles here and here.

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Special thanks to Grace Windhager for her assistance with this article.