How Climate-Friendly Are KiwiSaver Schemes

Highlights:

• Inaugural Climate Reports Submitted: Most KiwiSaver providers, including Fisher Funds Management Limited (NZSE: FIS), have submitted their first-ever climate reports, detailing emissions from their investment portfolios.
• Compliance with Climate Standards: Investment managers with over NZ$1 billion in assets must meet the External Reporting Board's climate financial disclosure standards, focusing on governance, strategy, and GHG emissions.
• FMA Review and Future Monitoring: The Financial Markets Authority (FMA) is reviewing the reports and will provide feedback by November, with a focus on future disclosures, particularly financial impacts and transition planning.

KiwiSaver Providers Submit Inaugural Climate Reports

Most KiwiSaver providers, including Fisher Funds Management Limited (NZSE: FIS), have filed their first-ever climate reports, detailing the emissions from their investment portfolios. As of July 31, approximately 35 investment scheme providers and 16 KiwiSaver providers submitted their climate reports to the Companies Office. The Financial Markets Authority (FMA) is now reviewing these submissions and plans to release its observations by the end of November.

Compliance with Climate Standards

Under New Zealand's Financial Markets Conduct Act, investment managers with over NZ$1 billion in assets must comply with the External Reporting Board’s (XRB) climate financial disclosure framework. The framework includes three climate standards that cover governance, strategy, risk management, and metrics related to greenhouse gas (GHG) emissions. The first standard, NZ CS 1, focuses on these thematic areas, while NZ CS 2 allows entities to adopt seven provisions, easing some reporting requirements in their first year.

FMA’s Oversight and Future Expectations

The FMA’s head of audit, Jacco Moison, indicated that while many providers have adhered to the requirements, some have utilized early adoption provisions to mitigate the challenges of initial reporting. The FMA is now focusing on monitoring new disclosures, particularly those related to financial impacts and transition planning. The findings report, expected in November, will guide entities with December year-end reporting to refine their future climate reports. The FMA's review marks the first legal scrutiny of climate statements globally, setting a precedent for other regulators.

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