Climate-related disclosures: Insights and key takeaways from the FMA’s 2026 reviews

Positive findings:

• Clearer and more accessible report structures;
• An uplift in the quality of greenhouse gas (GHG) emissions disclosures;
• Enhanced understanding and application of current climate-related impacts; and
• Improved articulation of governance and risk management processes.

Issues requiring immediate attention from CREs:

• Incomplete filings on the CRD register: Ensure all cross-referenced documents (e.g. sector-based scenarios) are filed on the CRD register.
• Referring to prior-year statements: Referring to prior climate statements to provide necessary information (e.g. stating that scenario analysis was conducted as described in the prior year’s climate statement) undermines the usefulness and completeness of current-year climate statements. 
• Material inconsistencies between periods: Explain any material changes between reporting periods, including where targets have not been achieved.
• Targets and offsets: Clearly disclose the extent to which targets rely on carbon offsets.
• Assurance over GHG emissions: Ensure GHG Inventory Reports forming part of CRD disclosures are clearly identified, cross-referenced and filed on the CRD register. 

Regulatory priority: Physical risks and their anticipated impacts

Strengthening the quality of physical risk disclosures was the FMA’s priority during this review period, and is likely to receive close attention in future reviews. Investments the FMA is undertaking toward achieving this objective are:

• Creating a register of publicly available New Zealand climate hazard data sources;
• Running educational workshops on physical risk assessment (with input from a climate scientist);
• Publishing educational guidance; and
• Providing more detailed feedback on physical risk disclosures in individual CRE meetings.

Key actions for CREs

1)  Understand that physical risks often materialise through other risk categories:

CREs should be aware that physical risks often materialise not as direct physical damage or loss, but through other risk categories such as operational disruption, asset impairment, rising insurance costs, credit risk, or market risk.

Disclosures should explain how climate-driven physical events could translate into resulting transition risks, where applicable. For example, increased short-duration high-intensity rainfall is an acute climate-related hazard leading to increased pluvial flood risk. This might not immediately damage assets or create direct costs, but can lead to material financial risks, such as higher insurance premiums, lower property values, business disruptions, or increased credit risk exposure.

2)  Explain and distinguish between hazards, exposure and vulnerability:

CREs should detail how underlying physical climate drivers and events translate into risk. This includes an explanation of:

• How relevant hazards (supported by appropriate data, analysis and explanation) can result in damage or loss (e.g. perils); and
• How your assets or business activities that could be exposed, including the factors contributing to their vulnerability.

Hazards

• CREs should ensure their disclosures identify specific climate hazards rather than relying on vague or generic language such as "severe weather events" or "climate impacts may occur".
• Each hazard should be described with reference to its type (acute or chronic), the physical mechanism through which it causes damage or loss, and how the hazard is changing over time in terms of frequency, intensity, severity, or duration.
• CREs should avoid grouping multiple hazards with differing materiality into a single risk, as this may obscure material hazards. Where hazards are grouped, the relative influence of different hazards on each risk should be clearly explained. 

Exposure and Vulnerability

• CREs must ensure their physical risk disclosures include both:
  • an adequate description of the assets, operations or activities exposed to that risk; and
  • the characteristics and factors that influence whether those exposures are vulnerable.
• CREs must ensure they are disclosing an adequate vulnerability metric (hazard × exposure × vulnerability), and that the metric is directly linked to the material risks disclosed.

Data collection and analysis – the FMA’s findings

Weaknesses the FMA has identified in this area are that the data outputs used for physical risk analysis were often not the most appropriate for the specific hazards being assessed and that the supporting information to explain the data collection and analysis underpinning these disclosures was often insufficient.

What are the FMA’s expectations?

• CREs should progressively improve their understanding of the climate hazard data outputs they use, assess whether those outputs are appropriate for their physical risk assessments, and identify any limitations in their current approach;
• Where more up-to-date data outputs are available, CREs should update their disclosures accordingly; and
• Where third-party providers are engaged, the CRE retains responsibility for the adequacy and clarity of its disclosures.

Anticipated impacts disclosures - focus on disclosing only what is useful for primary users

• Do not conflate physical risks with the anticipated impacts of those risks;
• Explain how your entity expects to be affected by each anticipated impact, rather than simply stating that an impact may occur; and
• Do not list generic anticipated impacts without articulation of how each underlying risk is expected to affect the entity, or where you are otherwise disclosing that the entity has nil exposure.

FMA expectations on timing

The FMA would like to see an uplift in disclosure quality over the next two review periods for describing physical risks and anticipated impacts. CREs should be guided by their judgement as to what is material and useful for primary users.

CREs should be able to improve disclosures based on processes and information already available to them, but they are reminded that the FMA will continue to take an educative and constructive approach in relation to an entity’s underlying data and analysis substantiating hazards until at least 2030.

The FMA also confirms it does not expect CREs to undertake their own climate modelling but that CREs should consider whether additional publicly available data outputs can be used.

Current financial impacts and transition planning

As Adoption Provisions 1 and 3 were no longer available in CREs’ second reporting years, CREs will now have disclosed current financial impacts and transition plan aspects of strategy.

The FMA has identified two areas for improvement in this regard:

• Ensure coherency between your CRD and financial statement disclosures: for example, where a material climate-related matter is raised in the financial statements (e.g. a subsequent event, impairment or provision), ensure this is coherently disclosed in the CRD as a current financial impact; and
• Ensure linkage between transition plan and climate-related risks and opportunities (CRROS): clearly link your transition plan targets and actions to your material CRROs, including in particular your response to key physical risks.

The Climate Standards do not require CREs to have a transition plan, and it is permissible to disclose that you have no mitigation or adaptation targets or that your strategic positioning is unchanged. However, if you have no targets or actions in place to address material CRROs, the FMA expects you to disclose this clearly - as it is likely to be material information for primary users.

Assurance over GHG emissions disclosures 

The FMA assessed compliance with the requirement to obtain assurance over GHG emissions disclosures. It also reviewed independent assurance reports against NZ SAE 1 (NZ Standard on Assurance Engagement), finding several examples of non-compliance. CREs are encouraged to discuss these points with their assurance providers to ensure they are meeting their obligations under the Financial Markets Conduct Act 2013 (FMC Act).

Key takeaways relating to assurance

• Ensure your assurance engagement is conducted under NZ SAE 1 (not an Australian or other standard);
• If cross-referencing to a GHG Inventory Report, specifically identify which sections form part of your mandatory disclosures;
• Ensure that your GHG Inventory Report and associated assurance report are not dated before the climate statements are signed; 
• Lodge the assurance report on the CRD register within four months of your entity’s balance date; and
• If you are disclosing additional voluntary assurance obtained over other areas of the CRD (e.g. over other metrics or targets) ensure you have provided an independent assurance report covering that aspect of the assurance.  

If you are considering publishing a voluntary climate statement

Non-CREs that choose to publish voluntary climate statements should note that:

• If you describe your report as “aligned” with the NZ Climate Standards (NZCS), you should clearly identify any requirements you have not complied with;
• Assurance is not mandatory for voluntary climate statements. CREs are permitted to state compliance with NZCS even without obtaining assurance;
• Voluntary climate statements cannot be lodged on the CRD register; and
• The FMA’s recently published sustainability-related disclosure guidance sets out what good sustainability-related disclosure practice looks like, and how it will apply the provisions of the Financial Markets Conduct Act 2013 (FMC Act) including its enforcement toolkit, to sustainability-related claims. The details are covered further in our previous insight.

Broader CRD regime developments

As covered in our previous insights in February 2026 and October 2025, the Government’s proposed bill to narrow the scope of the CRD regime is expected to pass before the election.

The proposed changes will:

• Remove deemed director liability for certain breaches for all reporting entities;
• Raise the threshold for listed issuers; and
• Remove reporting requirements for fund managers.

In the meantime, affected CREs can rely on the FMA’s ‘no action’ relief in respect of obligations that will cease once the legislation is passed.

In addition, the has Government announced it would be removing nine health and life insurers from the regime. From 19 June 2026, the FMA announced it would also be taking a ‘no action’ approach to health and life insurers who are expecting their climate reporting obligations to cease once legislation is passed.

Upcoming climate consultations

The XRB is also consulting on a number of matters relevant to CREs, including:

• The development draft climate reporting roadmap for New Zealand; and
• Targeted amendments to align the NZCS 1 requirements for the disclosure of scope 3 investment-related GHG emissions with international practice.

Climate reporting roadmap for New Zealand

The XRB intends to publish a draft climate reporting roadmap for consultation. This consultation will be open for a four-month period (expected from early July).

The roadmap will propose a strategic direction for future climate reporting that will be fit for purpose in New Zealand while also maintaining international alignment as expectations overseas develop over time.

The roadmap is being informed by a range of inputs, including:

• The XRB’s consultation last year on alignment with overseas climate reporting regimes;
• Early implementation experience from CREs;
• Feedback from reporting entities and practitioners;
• Regulatory insights; and
• Evolving international developments.

This consultation will be open for a four month period (expected from early July).

Changes to Scope 3 GHG emissions assurance requirements

The XRB’s Sustainability Reporting Board has proposed targeted amendments to NZCS 1 to align scope 3 GHG emissions disclosure requirements with recent international amendments by the International Sustainability Standards Board and Australian Accounting Standards Board.

The proposals would permit entities to exclude certain sources from their scope 3 GHG emissions disclosures, including emissions attributable to derivatives, insurance and reinsurance underwriting activities, and capital market issuance activities.

Consultation is expected to open on 30 June 2026, and close on 29 July 2026.