• Market-cap threshold for mandatory climate disclosures raised from NZ$60 million to NZ$1 billion (about US$573 million).
• Managed investment schemes removed from the regime, cutting reporting entities from 164 to 76.
• Policy forms part of broader reforms to reduce compliance costs and attract new NZX listings.
Wellington moves to restore business confidence
New Zealand is easing its climate-reporting requirements as part of a wider effort to revive capital markets and reduce regulatory burdens on smaller listed companies. The government will lift the market capitalisation threshold for mandatory climate disclosures from NZ$60 million to NZ$1 billion (about US$573 million), a sixteenth-fold increase that will sharply reduce the number of firms required to report climate-related financial risks.
Commerce and Consumer Affairs Minister Scott Simpson said the adjustments aim to make the regime “fit for purpose” after some companies reported compliance costs as high as NZ$2 million. “We’re making common-sense adjustments so the regime supports growth rather than discourages listings,” he said.
Managed investment schemes (MIS) will be removed entirely from the reporting regime, reducing the total number of reporting entities from 164 to 76. Legislation for the reforms will be introduced through the Financial Markets Conduct Amendment Bill, expected to pass by 2026.
From deterrent to incentive
The changes come amid sluggish activity on the New Zealand Stock Exchange. Since 2020, only 34 companies have listed — including six IPOs — while 37 have delisted. The government sees compliance costs and reporting obligations as among the factors deterring smaller firms from entering the market.
The reforms are designed to “encourage new sharemarket listings, cut costs for smaller listed companies and improve transparency over private asset investment,” Simpson said. They follow earlier steps in June that made it optional for companies launching IPOs to provide forward-looking financial information, a shift meant to reduce listing costs and disclosure risks.
Under the new climate-reporting rules, only the country’s largest firms — those with market caps above NZ$1 billion — will be required to file annual climate-related disclosures. Smaller companies will be exempt, while larger entities must continue to report on their exposure to climate risks and opportunities.
A recalibration, not retreat
New Zealand was among the first countries to legislate mandatory climate-related financial disclosures, requiring large firms to report in line with Task Force on Climate-related Financial Disclosures (TCFD) principles. The first reports were published in 2024.
Critics of the rollback caution that the threshold lift risks weakening corporate climate accountability just as international reporting standards converge under the International Sustainability Standards Board (ISSB). However, government officials describe the move as a recalibration rather than a retreat — one that balances transparency with competitiveness.
The administration is also adjusting director and company liability provisions to clarify responsibility for reported climate data. Officials say these refinements are necessary to prevent directors from facing disproportionate legal exposure in an evolving reporting environment.
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Expanding visibility in private markets
Complementing the climate-reporting changes, the government will introduce new asset disclosure categories for managed funds, including KiwiSaver schemes, to increase visibility into private asset investments. Starting March 2027, fund managers will need to specify whether each asset is based in New Zealand or overseas, and classify it by type — such as infrastructure, debt, or unlisted equities.
The disclosures will be lodged in the Companies Office’s Disclose Register, allowing investors to better track where KiwiSaver funds allocate capital and how unlisted assets perform over time. The initiative aligns with government efforts to deepen domestic investment channels and build confidence among retail and institutional investors.
Implications for investors and governance
For corporate leaders, the recalibrated regime reduces the immediate compliance load but introduces new governance expectations. Large-cap companies will remain under scrutiny to demonstrate credible climate-risk management and strategic resilience in line with ISSB-aligned frameworks. Investors may also look for voluntary disclosures from mid-cap firms seeking to maintain ESG credibility despite being exempt from mandatory reporting.
For policymakers and regulators, the reforms test how far climate transparency can be scaled back without undermining investor confidence. Internationally, the move will be watched as a case study in balancing sustainability ambitions with market competitiveness — particularly as other small economies grapple with similar cost pressures in implementing TCFD-style regimes.
By 2026, when the new framework takes full effect, New Zealand’s approach will reveal whether a lighter touch can reinvigorate listings while maintaining the integrity of climate governance in one of the world’s most progressive ESG markets.
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