Beyond the Numbers: Turning NZ’s Climate Disclosure Requirements into Strategic Assets

As New Zealand leads the charge in mandatory climate-related financial disclosures, businesses are now confronted with new expectations—demanding, yes, but brimming with opportunity. In this first entry of a two-part series, we explore the framework reshaping climate reporting in New Zealand and some essential considerations for crafting reports that go beyond box-ticking. In the follow-up article, we’ll focus on how to capitalise on the compliance groundwork you’ve invested so heavily in, moving it beyond the CDR into a compelling narrative that you use elsewhere, building trust, strengthening your brand, and preparing your organisation for a sustainable future.

What we’ve learnt and observed so far

Mandatory Climate-Related Financial Disclosures

New Zealand’s climate disclosure framework (based on the ISSB and IFRS frameworks), requires large entities, especially those in high-emission sectors, to assess and report transparently on climate risks. This will soon include transition plans, covering emission targets and strategies for achieving them. Increasingly, companies must consider 'double materiality'—evaluating financial and environmental impacts. This means going beyond just protecting profit margins; it’s about understanding the larger interplay between operations and environmental change.

What we have observed in this first mandated reporting year is:

a.  excellent quality content

b.  extremely pressured client teams

c.  a single-minded focus on compliance, data collection and collation

d.  understandably little consideration of opportunities within the information collated, with only the most immediately obvious impacts and initiatives being harnessed to help investors reading the accompanying annual reports to understand current and future impacts.

Key aspects to keep in mind

1.      Realistic targets and avoiding greenwashing

The public expects action, investors expect risk mitigation, and regulators are raising the bar for transparency. High-level promises are no longer sufficient; targets must soon be concrete (timing currently being reconsidered by the XRB), backed by data, and achievable. Greenwashing is under intense scrutiny, and trust is built through transparency about both challenges and incremental progress rather than presenting a flawless front.

Organisations should clearly articulate short-, medium-, and long-term impacts, providing realistic data on how climate change could affect financial performance. This analysis informs decision-makers and investors, offering a nuanced view of climate scenarios’ impact on capital flow and risk.

2.      Intensive data collection and assurance

Reporting standards require extensive data—Scope 1, Scope 2, and increasingly, the challenging Scope 3 emissions. This necessitates robust data systems and, where possible, third-party assurance. Scope 3 emissions, though very challenging, serve as a precursor to the next XRB requirement: a transition plan. Measuring these elements signals to stakeholders that climate impact tracking is as rigorous as financial reporting.

3.      Developing a dynamic transition strategy

The XRB’s upcoming requirements will demand a clear transition plan to a climate-resilient future.

Initially, this won’t need perfection and can be directional and intent-oriented. And, unlike reporting Scope 3 emissions, the transition plan doesn’t require third-party data.

Eventually though, it should outline a clear programme that positions organisations as future-ready, including specific targets, interim milestones, and adaptable actions. Flexibility is key here; companies need pathways that allow them to pivot in response to emerging climate risks and regulatory changes.

Whether next year or delayed until the year after, it’s still a hurdle that needs to be faced. But given the considerable internal resource required to meet this year’s disclosure, the voices requesting a slowdown are very understandable.

4.      Leveraging the opportunities revealed by the risks

Companies should identify where growth potential exists by aligning with the low-carbon economy. Companies often fall short in this area, focusing heavily on compliance without leveraging insights to drive strategy. A proactive approach here allows organisations to reframe risk management processes and actively pursue sustainable growth avenues.

5.      Potential in scenario analyses

Scenario analyses can offer valuable storytelling opportunities beyond risk analysts and compliance-checkers. For many companies, explaining future pathways, strategic responses, and contingency plans can engage a broad range of stakeholders, from employees to customers to the general public, building trust in the organisation’s governance and management’s future sightlines.

We believe that, for some industries, much can be made of bringing the various scenarios of climate effects to life so that customers can understand future possible price increases or product changes, and employees can see how their career paths might play out depending on how climate affects the company’s future.

6.      Integrating disclosures with financial statements

Embedding climate information in financial statements links climate impacts directly to the company’s bottom line, requiring collaboration between finance and sustainability teams. This integrated approach enhances transparency around valuations, asset impairment, and operational costs.

7.      Design to match

You want audiences to see your company-wide adoption of your climate initiatives, so make that unity visible in your corporate reporting suite of documents. Ensure that your CDR is a visual partner to your other corporate reporting, matching the style, format and professionalism of your Annual or Integrated Report, your Financial Statements, your Sustainability Report and your Modern Day Slavery Report.

The road ahead

The new framework does bring challenges—time, resources, and a steep learning curve. But compliance is only a baseline to be capitalised upon. Plan now to shift from compliance intelligence to inspiring storytelling. Organisations can redefine their market position and reinforce stakeholder confidence through transparent, actionable reporting - beyond the confines of the Disclosure Report,

Ask questions like: How does climate risk shape your long-term business model? How is the company preparing to thrive in a low-carbon world? What’s the impact on financial performance? The second blog in this series will explore how to answer these questions effectively.

Ultimately, climate reporting should be more than a box to tick; it’s a springboard for a narrative that demonstrates resilience, readiness, and a commitment to a low-emission future.