New Zealand’s Climate Reporting Regime Is Growing Up & Regulators Are Losing Patience With Vague Risk Language

Key Takeaways

• Physical Risks Under the Microscope: The FMA signaled growing concern that many climate disclosures still fail to clearly explain how real-world climate hazards translate into operational and financial risks.
• Better Reporting, Higher Expectations: Regulators acknowledged improvements in governance disclosures, report structure, and greenhouse gas reporting, but reviews are now moving beyond surface-level compliance toward assessing whether disclosures are materially reliable.
• Data Quality Becoming a Bigger Issue: The FMA warned that some companies may be relying on inappropriate climate data or analytical methods, creating the risk of understated, overstated, or misidentified climate exposures.
• Transition Plans Facing Greater Scrutiny: Some organizations disclosed material climate risks without clearly outlining targets, actions, or strategic responses, raising concerns about the substance behind transition planning disclosures.
• Education Still the Preferred Approach: Rather than shifting immediately toward aggressive enforcement, the regulator plans to increase workshops, guidance, and feedback focused on improving physical risk assessments and disclosure quality.

Deep Dive

Buried inside the New Zealand Financial Markets Authority's latest review of New Zealand’s climate disclosure regime is a fairly direct message to companies that have gotten comfortable speaking in broad climate abstractions. The easy part was learning the vocabulary. The harder part is explaining, in plain terms, what actually gets damaged, where, and how badly.

The FMA’s 2026 Climate-related Disclosures Insights Report reviewed 62 climate statements from the second year of mandatory reporting under New Zealand’s climate disclosure framework. The regulator found genuine improvement. Reports are cleaner. Governance disclosures are sharper. Greenhouse gas reporting has improved. Companies appear more familiar with the mechanics of the regime and more willing to treat climate risk as something other than a sustainability appendix that exists mainly because lawyers told them it had to.

The FMA says many disclosures still fail to adequately explain physical climate risks. Not climate risk in the abstract. Physical risk. Actual things happening to actual assets. Extreme rainfall leading to flooding. Flooding affecting facilities. Facilities disrupting operations. Operations hitting revenue. The report repeatedly returns to this chain of causality because too many disclosures apparently skip over it entirely, jumping from “climate hazard” to vague corporate language about resilience and monitoring.

One of the more revealing sections of the report notes that the FMA reviewed some disclosures with assistance from a climate scientist and found that entities were, in certain cases, relying on questionable data or inappropriate analytical methods when assessing physical hazards. That matters because bad climate analysis does not fail gracefully. If a company understates a risk, investors misunderstand exposure. If it overstates a risk, money and resources get thrown at the wrong problem. Both outcomes distort decision-making.

There is a quiet escalation happening here. Last year, regulators were still focused on whether companies had managed to produce the required disclosures at all. This year, the tone is different. The report explicitly states that reviews are shifting from checking whether disclosures merely satisfy requirements “on the face” of the report toward assessing whether statements are fairly presented and free from material misstatement.

Jenika Phipps, the FMA’s Manager of Climate Related Disclosures, tries to strike a measured tone throughout the report and accompanying release. She acknowledges the progress. She also keeps pulling the conversation back toward physical impacts, almost as if the regulator believes companies still haven’t fully absorbed the point that climate risk is supposed to describe reality rather than aspiration.

“Climate change is already affecting New Zealand through more frequent and severe weather events,” she said, noting that the impacts may emerge directly through damage to assets and operations or indirectly through customers, supply chains, insurance availability, and other knock-on effects.

The report also spends time on transition planning disclosures, which became mandatory for the first time this year. Here again, the regulator’s frustration occasionally shows through the diplomatic language. Some companies disclosed material climate risks without clearly explaining what targets, actions, or strategic responses existed to address them. In some cases, there were no targets or actions at all. The FMA notes, somewhat dryly, that the absence of a response to a material climate risk may itself be material information for investors.

There are smaller tells throughout the report that suggest the regime is entering a more mature and more scrutinized phase. The FMA flagged unexplained inconsistencies between reporting periods. It raised concerns about incomplete cross-referencing on the climate disclosure register. It identified assurance issues tied to greenhouse gas reporting, including cases where required assurance reports were missing or where disclosures made it difficult to determine what information had actually been assured.  

None of this reads like a regulator preparing to crack down aggressively. Quite the opposite, actually. The FMA goes out of its way to describe its approach as “educative” and “constructive.” It plans workshops. It wants to help companies understand physical risk methodologies. It is compiling public climate hazard datasets that companies can use rather than expecting every organization to build its own climate modeling capability from scratch.

But the tone of education has changed. Early-stage regulatory patience has a different texture from mature oversight patience. The first says, “We understand this is new.” The second says, “You’ve had time now.” And that distinction hangs over the entire report.

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