New Zealand
Contributing law firm: Bell Gully
Contact: Richard Massey, Partner

ESG in APAC - New Zealand by Bell Gully
Please click on the podcast above for a snapshot of the three key themes of ESG reporting, transition planning and greenwashing risks in respect of New Zealand. Scroll down for further information on each key theme.
A. ESG Reporting
1. Are there legal or regulatory requirements for companies to make ESG disclosures in your jurisdiction?
Yes, there are mandatory climate-related disclosures based on the disclosure regime recommended by the TCFD. New Zealand was the first country to commit to making TCFD reporting mandatory and legislation establishing the climate reporting regime was passed in 2021.
NZX Limited (NZX) has a “comply or explain” regime for ESG disclosure, which applies to NZX-listed issuers of equity securities.
The Financial Markets Authority (FMA) has published guidance that sets out its expectations from issuers of financial products that incorporate non-financial elements (such as terms like “ethical”, “responsible”, “sustainable”, “green” and ESG).
2. What are the key legislative and regulatory sources for ESG disclosure requirements and to whom do they apply?
Mandatory Climate Reporting
(a) The Financial Markets Conduct Act 2013 (FMCA) requires certain entities to make prescribed climate-related disclosures.
(b) The regime applies to “Climate Reporting Entities” (CREs), comprising: large listed companies (with a market capitalisation of more than NZ$60 million), large registered banks, large licensed insurers, large credit unions, large building societies, and fund managers with significant assets under management (more than NZ$1 billion).
(c) CREs are required to prepare “climate statements” relating to its accounting periods. The climate statements must comply with the “climate-related disclosure framework”, which is made up of a series of “climate standards”.
(d) The climate-related disclosures regime took effect for accounting periods that started on or after 1 January 2023. This means (for example) that entities with a 30 June balance date are required to prepare their first climate statement in relation to the accounting period to 30 June 2024.
(e) The External Reporting Board (XRB) is responsible for developing the climate standards and the FMA is responsible for enforcing compliance.
NZX Corporate Governance Code & Guidance
(a) The NZX Corporate Governance Code (Code) provides recommendations in relation to corporate governance principles for NZX-listed issuers to report under the NZX Listing Rules. It operates on a “comply or explain” basis.
(b) One of the key aims of the Code is to promote issuer disclosure of ESG factors. In particular, one of the recommendations is that: “An issuer should provide non-financial disclosure at least annually, including considering environmental, economic, governance and social sustainability factors and practices. It should explain how operational or non-financial targets are measured. Non-financial reporting should be informative, include forward looking assessments, and align with key strategies and metrics monitored by the board.” Issuers may include other non-financial information, such as a description of the performance of an issuer’s business against strategic goals.
(c) The NZX has published an updated guidance note for issuers that are considering the disclosure of ESG factors under the Code (NZX Guidance). The note aims to help issuers better understand the benefits of ESG reporting and the global reporting regimes available. The note outlines good ESG practices and accepted frameworks for issuers to consider.
FMA Disclosure Framework
The FMA has published a disclosure framework (Disclosure Framework) for issuers of financial products that incorporate non-financial features (which the FMA refers to as “integrated financial products”).
3. Are the requirements mandatory or do they apply on a comply-or-explain basis?
The requirement to prepare climate statements is mandatory for CREs.
The NZX recommendation applies on a comply-or-explain basis.
The FMA Disclosure Framework applies to issuers of integrated financial products. It is not expressed as being mandatory in a strict sense, but is guidance from the FMA as to how it intends to interpret the relevant provisions of the FMCA, so is treated as effectively mandatory.
4. Which aspects of ESG do the requirements focus upon?
Mandatory Climate Reporting
CREs are required to prepare “climate statements” which must comply with the “climate-related disclosure framework” based on TCFD recommendations, covering governance, strategy, risk management and metrics / targets. The framework is made up of a series of “climate standards” issued by the XRB.
NZX Corporate Governance Code & NZX Guidance
The NZX Guidance encourages good ESG practices for issuers to consider adopting when making ESG disclosures, focusing on the impact of ESG factors on business models, management of ESG risks and the transition to a low carbon economy.
FMA Disclosure Framework
The FMA Disclosure Framework outlines the type of disclosure that the FMA would expect to see from issuers of “integrated financial products”. It focuses on the “fair dealing” provisions in Part 2 of the FMCA and the framework notes that the fair dealing provisions apply broadly and the FMA will consider whether the conduct or disclosure is likely to mislead or confuse as perceived by the investor. The framework also focuses on how performance against non-financial factors is measured and evidenced, the monitoring and governance framework relevant to non-financial factors and associated risks with the integrated financial products.
5. Are the disclosure requirements based on international standards? If so, which one(s)?
The climate-related disclosure reporting has been developed in line with the recommendations of the TCFD.
The NZX Guidance and FMA Disclosure Framework each refer to relevant international frameworks, but are not based on them.
6. How do the disclosure requirements approach materiality (e.g. single or double materiality)?
The mandatory climate reporting regime explicitly approaches materiality as double materiality. The New Zealand Climate Standard 3 (NZ CS 3) defines information as “material” if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users make on the basis of an entity’s climate-related disclosures. This broad definition of “materiality” requires an entity to consider the context it operates in (i.e., an entity’s geographical location, its industry sector, or the state of the economy), whilst also considering the size of ESG impacts against measures of the entity’s financial position, performance and cash flows.
The NZX Corporate Governance Code and NZX Guidance infer that the approach to materiality is single materiality. By way of example, the NZX Guidance specifies that issuers may wish to explain the relevance of ESG factors to their business, and the material ESG risks faced by the business.
The FMA Disclosure Framework infers that the approach to materiality is double materiality. The FMA expects that an integrated financial system requires organisations to consider the impact of their activities on the environment, communities and individuals, alongside traditional financial factors. This also requires organisations to identify ESG risks for their business and to disclose how these will impact the business’ financial performance.
7. Are there requirements for the disclosure of GHG emissions? If so, please specify the scope (e.g. Scope 1, Scope 2 and/or Scope 3), to whom they apply and whether there are requirements on the measurement methodology.
Yes, there are requirements for the disclosure of GHG emissions by CREs in their climate statements.
CREs must disclose emissions for Scope 1, Scope 2 (calculated using the location-based method) and Scope 3 emissions. However, there is an exemption from this requirement for the first year – although disclosure of Scope 3 emissions is encouraged, it is not required until the climate statements for the accounting period commencing during calendar 2024.
In the mandatory climate reporting “climate standards”, the XRB recognises globally accepted standards such as the GHG Protocol Corporate Accounting and Reporting Standard and ISO 14064-1 for GHG emissions measurement and reporting. However, the XRB does not mandate a specific GHG emissions measurement approach, but requires CREs to disclose the standards they use. The XRB has determined through consultation and analysis that different measurement standards can yield comparable results. Therefore, CREs must transparently disclose their chosen standards under the XRB's guidelines.
8. Are there requirements to obtain independent assurance of any ESG disclosures? If so, what is the scope of such requirements?
Mandatory climate reporting
Yes.
GHG disclosure included in climate statements must be subject to an assurance engagement. However, there is no external assurance requirement for the first climate-related disclosure statements. CREs will only be required to obtain external assurance from the second climate statement (i.e., for the accounting period starting in 2024).
The minimum level of assurance for GHG emissions proposed is set at limited assurance, however this will be revisited once the assurance regime has commenced.
The assurance practitioner must comply with applicable standards when carrying out the assurance engagement (i.e., the Standard on Assurance Engagements 1, issued by the XRB on 3 August 2023). The assurance engagement can cover other parts of the climate-related disclosure as well, or the whole statement.
The assurance report will need to be filed with the climate statements.
NZX Guidance / FMA Disclosure Framework
No assurance required.
9. For companies not subject to mandatory or comply-or-explain ESG reporting, are voluntary ESG disclosures customary?
Yes. A number of non-CRE New Zealand entities voluntarily adopted TCFD-based climate-related disclosures into their annual reporting. This has increased since 2019 when the New Zealand Government endorsed the TCFD Recommendations.
In respect of the NZX Guidance, it is also relatively common for NZX-listed issuers to include ESG disclosures in their annual reports. This disclosure is increasingly requested by investors.
It is also common in New Zealand for integrated financial products to be issued with ESG-related disclosure.
10. Has your jurisdiction issued or adopted a taxonomy on sustainable activities? Is it mandatory and what is its scope of application?
The three standards (listed above in section A.4) provide a taxonomy. In particular, NZ CS 3 establishes a glossary of defined terms as a taxonomy. The taxonomy exists within the mandatory reporting regime. It is described as an integral part of NZ CS 3. It includes definitions of key terms like “greenhouse gas”; “scope 1 emissions”; “scope 2 emissions”; and “scope 3 emissions”.
In July 2024, the Centre for Sustainable Finance: Toitū Tahua (CSF), an industry body, prepared a recommendations report for developing a sustainable finance taxonomy for New Zealand. CSF had been tasked by the New Zealand Government to convene an Independent Technical Advisory Group to prepare and publish non-binding advice on the design of a taxonomy and provide its recommendations to the Minister of Climate Change.
11. Are there plans to adopt or incorporate the ISSB’s IFRS S1 and/or S2 standards? If so, please indicate the extent of alignment, to what extent the standards will be mandatory, to whom they will apply and the timeline.
The XRB has stated that it is committed to paying close attention to the ISSB’s work including IFRS S1 and S2. The XRB has acknowledged the need to enable New Zealand entities to report in a globally consistent matter. To that end, they will continue to engage with the ISSB and monitor their work.
A post-implementation review of New Zealand Climate Standards will commence in December 2025 where the XRB will consider aligning with requirements in international standards if they meet user needs and the objective of New Zealand Climate Standards.
12. Other upcoming developments / direction of travel
CREs are focussing on their first mandatory climate statements, which are due this year. The FMA and XRB are focussing on supporting CREs in preparing their statements.









B. Transition planning
1. Has your jurisdiction set decarbonisation targets and strategies?
Yes – at the end of 2019, the New Zealand Government set a target for net-zero greenhouse gas emissions by 2050 (other than for biogenic methane, to be 24-27% below 2017 levels). The Climate Change Commission recently consulted on its discussion document on its review of the 2050 target, to ensure that it remains fit for purpose. The advice by the Climate Change Commission is expected to be delivered to the Minister of Climate Change and published before 21 December 2024.
The Climate Change Response Act 2002 requires the Government to set “emissions budgets” (the total quantity of emissions allowed during an emissions budget period). This aims to keep the Government on track to meet the long-term reduction target. Each emission budget covers a time period. This year, the Climate Change Commission will also be delivering advice on the fourth emissions budget period (2036 to 2040) and whether emissions budgets one, two and three (covering 2022 to 2035) should be revised.
At the time of this advice, the Government has set the first three emission budgets and published an Emissions Reduction Plan.
The Emissions Reduction Plan includes actions relating to system settings for reducing emissions, including approaches for empowering Māori, ensuring an equitable transition plan and working with nature. It also includes plans for reducing emissions in key emitting sectors, including the energy and industry sectors.
2. Has the government or any regulator in your jurisdiction launched compliance and/or voluntary carbon trading schemes or carbon taxes? If so, please give details. If not, are there plans to do so?
Yes, the New Zealand Emissions Trading Scheme (NZETS) is a mandatory carbon-trading market that applies to emitters in specified industries (and voluntary for emitters outside the regime).
The NZETS helps reduce emissions by doing three main things:
(a) requires emitters to measure and report on their greenhouse gas emissions;
(b) requires emitters to surrender one “emissions unit” (known as an NZU) to the Government for each one tonne of emissions they emit; and
(c) limits the number of NZUs available to emitters (i.e., that are supplied into the scheme).
The Government sets and reduces the number of units supplied into the scheme over time. This limits the quantity that emitters can emit, in line with New Zealand’s emission reduction targets.
Businesses who participate in the NZETS can buy and sell units from each other. The price for units reflects supply and demand in the scheme.
3. Are there mandatory requirements for companies to have in place and/or disclose climate-related transition plans? If so, please give details (including whether there is any standard or guidance on transition plans and/or requirement to consider the social impact of the plan). If not, are there plans for such requirements?
There is no mandatory requirement to have a transition plan. However, in its climate statement, each climate reporting entity is required to include the transition plan aspects of its strategy, including:
(a) how its business model and strategy might change to address its climate-related risks and opportunities; and
(b) the extent to which transition plan aspects of its strategy are aligned with its internal capital deployment.
The XRB has prepared guidance on New Zealand Climate Standard 1.
There is currently no requirement to consider social impacts as part of the transition plan disclosure. We are not aware of any plans to implement this requirement.
4. Are there mandatory requirements to set, meet and/or disclose climate-related targets? If so, please give details. If not, are there plans for such requirements?
There is no mandatory requirement to set targets. However, in its climate statement, a climate reporting entity is required to include information on the metrics and targets used to measure and manage climate-related risks and opportunities. The XRB has prepared relevant guidance.
Information on targets must include:
(a) the relevant time frame;
(b) any associated interim targets;
(c) the base year from which progress is measured;
(d) a description of performance against the targets; and
(e) specific information for each GHG emissions target.
5. Other upcoming developments / direction of travel
None.

C. Greenwashing risks
1. Are there any recent examples of legal proceedings, regulatory actions or investigations against or into greenwashing in your jurisdiction?
Whilst the consumer and financial markets regulators (the Commerce Commission and the FMA) have each issued regulatory guidance regarding greenwashing, there have been relatively few examples of legal proceedings or regulatory actions regarding greenwashing in New Zealand. However, recent examples include:
(a) Z Energy: Proceedings against Z Energy have been lodged in the High Court by Lawyers for Climate Action New Zealand and Consumer New Zealand for greenwashing. The claimants submit that Z Energy has made numerous claims which give the impression that it is attempting to significantly reduce its emissions and mitigate its contribution to the climate crisis, despite being New Zealand’s second largest greenhouse gas emitter. Lawyers for Climate Action originally complained to the Commerce Commission, who acknowledged the issues in the complaint, but declined to investigate. Lawyers for Climate Action therefore seek a Declaration from the High Court which will hold Z Energy accountable and will clarify the law on greenwashing in NZ (November 2023),
(b) Vanguard was issued a warning letter by the FMA for failing to disclose details within the required time over infringement notices filed against it in Australia for alleged greenwashing (March 2023).
(c) Kiwipure was fined NZ$162,000 under the Fair Trading Act 1986 (FTA) for using unsubstantiated claims relating to their water filtration system (the claims were based on anecdotal evidence and assumptions rather than reliable scientific methods) (February 2020).
(d) Fujitsu was fined NZ$310,000 under the FTA for making unsubstantiated claims about the energy efficiency and performance of some of its heat pumps (September 2017).
In addition, the Advertising Standards Authority (ASA), a self-regulatory body funded by the advertising and media industries, has issued a number of decisions including findings of “greenwashing”. For example, Christchurch Airport chose to remove the words “climate positive” in relevant advertisements following a complaint made to the ASA regarding greenwashing (January 2024).
2. Are there any laws or regulations specifically dealing with greenwashing?
No, but the general prohibitions under the FMCA and FTA will apply (see our comments under section C.3 below).
The Commerce Commission has issued general guidance on environmental claims.
3. What are the likely grounds on which such proceedings, actions or investigations can be instigated?
There are no specific prohibitions against “greenwashing”. However, New Zealand’s consumer protection and financial services legislation (the FTA and the FMCA) each contain restrictions on “unsubstantiated representations” (being representations that are not supported by reasonable grounds at the time they are made) which are likely to be the primary basis for any allegations of greenwashing.
4. Other upcoming developments / direction of travel
The regulators currently have an active focus on greenwashing in both consumer and financial markets contexts.
Although there have been no major greenwashing claims in New Zealand to date, the risks of claims against companies are expected to increase (in particular, as the climate-related disclosure regime takes effect).
More generally, New Zealand is likely to introduce a new statutory class actions regime (following recommendations by the Law Commission in 2022), which is likely to increase the risk of any greenwashing claims where large numbers of consumers are affected.

This material is provided for general information only. It does not constitute legal or other professional advice.