Government Bill
30—3
As reported from the committee of the whole House
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Hon Dr David Clark
The Parliament of New Zealand enacts as follows:
This Act is the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021.
(1)
The following parts of this Act come into force on the day after Royal assent:
Part 2, other than sections 32(1) and 33:
section 43(1).
(2)
The rest of this Act comes into force on a date or dates set by Order in Council.
(3)
However,—
any part of this Act, other than Part 1A and subpart 1 of Part 3, that has not come into force by the first anniversary of Royal assent comes into force then:
any part of Part 1A and subpart 1 of Part 3 that has not come into force by the third anniversary of Royal assent comes into force then.
(4)
An Order in Council made under this section is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).
This Part amends the Financial Markets Conduct Act 2013.
After section 5(1)(g), insert:
Part 7A provides for climate-related disclosure obligations:
In section 6(1), insert in their appropriate alphabetical order:
applicable climate standard has the same meaning as in section 5(1) of the Financial Reporting Act 2013
authoritative notice has the same meaning as in section 5(1) of the Financial Reporting Act 2013
climate-related disclosure framework has the same meaning as in section 9AA of the Financial Reporting Act 2013
climate reporting entity has the meaning set out in section 461O
climate statements has the same meaning as in section 5(1) of the Financial Reporting Act 2013
CRD records means the records that a climate reporting entity is required to keep by subpart 2 of Part 7A
group climate statements has the same meaning as in section 5(1) of the Financial Reporting Act 2013
overseas climate reporting entity, in Part 7A, means a body corporate that—
is incorporated outside New Zealand; and
is a climate reporting entity under section 461O(1)(b) to (e) (see section 461P(3) and (4))
Part 7A climate-related disclosure provision means any of the provisions specified in section 461ZS(3) or (4)
separate fund, in Parts 7 and 7A, has the meaning set out in section 461A(2)
In section 6(1), replace the definition of group with:
group,—
in Part 7 and subpart 1 of Part 7A, means a group comprising an FMC reporting entity and its subsidiaries:
in Part 7A (other than subpart 1), means a group comprising a climate reporting entity and its subsidiaries
(2A)
In section 6(1), definition of licensed insurer, paragraph (b), replace “section 238(1)(b) of that Act” with “section 238(1)(b)(i)(A) or (ii) of that Act; and”.
“section 238(1)(b) of that Act”
“section 238(1)(b)(i)(A) or (ii) of that Act; and”
(2B)
In section 6(1), definition of licensed insurer, after paragraph (b), insert:
in Part 7A, does not include a Lloyd’s underwriter (within the meaning of that Act) or an insurer that is included in a class of insurers that is the subject of an exemption under section 238(1)(b) of that Act
In section 6(1), definition of subsidiary, replace “Part 7” with “Parts 7 and 7A”.
“Part 7”
“Parts 7 and 7A”
In the heading to section 351, after “7”, insert “or 7A”.
“7”
“or 7A”
Replace section 351(1)(ab) with:
providing that section 451(1)(d) does not apply in respect of persons that are listed issuers only in respect of a licensed market or class of licensed markets, and providing for replacement or modified requirements to apply relating to—
accounting records and financial reporting:
CRD records and climate-related disclosures (for those listed issuers that would otherwise be climate reporting entities under section 461O(1)(a)):
Repeal section 461C(3).
After Part 7, insert:
This Part provides for climate reporting entities to—
keep proper records relating to their obligations to make climate-related disclosures; and
prepare climate statements; and
lodge those statements.
This section is only a guide to the general scheme and effect of this Part.
In this Act, a person who is an FMC reporting entity that, under section 461K, is considered to have a higher level of public accountability than other FMC reporting entities is a climate reporting entity if that person is 1 or more of the following:
a listed issuer that—
is a large listed issuer; and
is not an excluded listed issuer:
a registered bank that is large:
a licensed insurer that is large:
a credit union that is large:
a building society that is large.
In this Act, a manager of a registered scheme (other than a restricted scheme) is a climate reporting entity in respect of the scheme if—
the manager is a large manager; and
section 461K(1)(b) applies to the manager in respect of the scheme.
In this section,—
excluded listed issuer has the meaning set out in section 461OA
large, in relation to a registered bank, licensed insurer, credit union, or building society, has the meaning set out in section 461P
large listed issuer has the meaning set out in section 461OA
large manager has the meaning set out in section 461Q.
For the purposes of this Part, a listed issuer is a large listed issuer in respect of an accounting period if either or both of the following apply at least 1 of the following applies to the listed issuer:
as at the balance date of each of the 2 preceding accounting periods, the issuer’s market capitalisation exceeds $60 million:
the listed issuer,—
at any time in the accounting period, has quoted equity securities; and
as at the balance date of each of the 2 preceding accounting periods, has equity securities (whether quoted or unquoted) that have a total value, as implied by the market price or fair value of those equity securities, that exceeds $60 million:
at any time in the accounting period, has quoted debt securities; and
at any time in the 2 preceding accounting periods, has quoted debt securities with a total face value that exceeds $60 million:
the listed issuer is large after amalgamation (within the meaning of section 461PA) in respect of the accounting period.
For the purposes of this Part, a listed issuer is an excluded listed issuer in respect of an accounting period if, at all times during the accounting period,—
the issuer has no equity securities, and no debt securities, that are quoted; or
any equity securities of the issuer and any debt securities of the issuer that are quoted are quoted only on a growth market.
any equity securities of the issuer and any debt securities of the issuer that are quoted are quoted only on a growth market; or
the issuer has no quoted equity securities and no quoted debt securities.
And see section 351(1)(ab) (which may allow for some listed issuers not to be FMC reporting entities and, consequentially, not climate reporting entities under section 461O(1)(a)).
(3A)
For the purposes of subsection (1)(a)(ii), fair value must be determined in accordance with generally accepted accounting practice.
In this section, growth market means a financial product market if—
the operator has a licence to operate the market issued under section 316; and
either or both of the following apply:
the licence is subject to a condition that limits the size of issuers that are eligible to become, or to remain, listed issuers on the financial product market (for example, a limit based on the issuer’s market capitalisation):
the market is otherwise designed for, and clearly targeted at, small- and medium-sized entities.
market capitalisation, in relation to—
a listed issuer of quoted equity securities, means the value of all of the issuer’s equity securities, as implied by the market price or fair value of those equity securities:
a listed issuer to which paragraph (a) does not apply and that has issued quoted debt securities, means the net assets of the issuer and its subsidiaries (if any) as reported in the most recent financial statements or group financial statements prepared in accordance with generally accepted accounting practice for the issuer and those subsidiaries.
For the purposes of this Part, a registered bank, credit union, or building society (A) is large in respect of an accounting period if either or both of the following apply:
as at the balance date of each of the 2 preceding accounting periods, the total assets of A and A’s subsidiaries (if any) exceed $1 billion:
A is large after amalgamation (within the meaning of section 461PA) in respect of the accounting period.
For the purposes of this Part, a licensed insurer is large in respect of an accounting period if at least 1 of the following paragraphs applies to the licensed insurer:
as at the balance date of each of the 2 preceding accounting periods, the total assets of the licensed insurer and its subsidiaries (if any) exceed $1 billion:
in each of the 2 preceding accounting periods, the annual gross premium revenue of the licensed insurer and its subsidiaries (if any) exceeds $250 million:
the licensed insurer is large after amalgamation (within the meaning of section 461PA) in respect of the accounting period.
However, if a registered bank, credit union, building society, or licensed insurer is an overseas company,—
subsections (1) and (2) do not apply; and
the overseas company is large for the purposes of section 461O(1)(b) to (e) if its New Zealand business, or its group’s New Zealand business, is large under subsection (4).
The New Zealand business of an overseas company or its group is large in respect of an accounting period if at least 1 of the following paragraphs applies (calculated as if the New Zealand business were an entity):
as at the balance date of each of the 2 preceding accounting periods, the total assets of the New Zealand business exceed $1 billion:
the overseas company is a licensed insurer and, in each of the 2 preceding accounting periods, the annual gross premium revenue of the New Zealand business exceeds $250 million.
(4A)
A financial reporting standard (or a part of a standard) issued by the External Reporting Board that is expressed as applying for the purposes of subsection (4) must be applied in determining whether that provision applies.
(5)
In this section, overseas company means a body corporate that is incorporated outside New Zealand.
For the purposes of this Part, a person (A) is large after amalgamation in respect of an accounting period if—
A amalgamated with a large entity during the accounting period; or
A is a new entity formed on the amalgamation of 2 or more entities during the accounting period, and at least 1 of those entities was a large entity.
If A is large after amalgamation under subsection (1) in respect of an accounting period, A continues to be large after amalgamation in respect of the next accounting period.
In this section, large entity means an entity that, in respect of the accounting period, was any of—
a large listed issuer under section 461OA(1) (other than an issuer described in section 461OA(2)(a) or (b) for the accounting period up to the time of amalgamation):
a registered bank, licensed insurer, credit union, or building society that is large under section 461P.
For the purposes of this Part, a manager (A) that holds a market services licence that covers the service referred to in section 388(a) is a large manager in respect of an accounting period of A if, as at the balance date of each of A’s 2 preceding accounting periods, the total assets of the following schemes exceed $1 billion:
all schemes for which A is manager; and
all schemes for which the manager is an authorised body that provides the service of acting as a manager of a registered scheme under A’s market services licence.
If A is a large manager, every manager described in subsection (1)(b) is also a large manager.
Company A holds a licence that covers acting as a manager of registered schemes. A’s subsidiaries, B and C, also provide this service under A’s licence (as authorised bodies).
The assets of the schemes for which A is manager total $700 million on the balance date of each of A’s 2 preceding accounting periods (the relevant balance dates).
The assets of the schemes managed by B total a further $300 million, and the assets of the schemes managed by C total $200 million, on each of the relevant balance dates.
The total assets therefore exceed $1 billion. A is a large manager. B and C are also large managers.
Subsections (4) and (5) apply if—
a manager and a scheme managed by the manager have different balance dates; and
the manager becomes, or ceases to be, a large manager.
If the manager was not a large manager in respect of an accounting period (AP1) but becomes a large manager in respect of the next accounting period (AP2), the manager—
is not treated as a large manager in respect of the scheme in relation to the accounting period of the scheme that starts in AP1 and ends in AP2 unless paragraph (b) applies:
must be treated as a large manager in respect of the scheme in relation to the accounting period of the scheme that starts in AP1 and ends in AP2 if—
the manager was not the manager of the scheme at the start of that accounting period of the scheme; and
the manager at the start of that accounting period of the scheme was a climate reporting entity in respect of the scheme.
If the manager was a large manager in respect of an accounting period (AP3) but ceases to be a large manager in the next accounting period (AP4), the manager must be treated as a large manager in respect of the scheme in relation to the accounting period of the scheme that starts in AP3 and ends in AP4.
(6)
In this section, the total assets of a scheme are—
as reported in the most recent audited financial statements, prepared in accordance with generally accepted accounting practice, for the scheme; or
if there are no such statements, as calculated—
for a date as near as possible to the balance date of the manager; and
as if for the purpose of preparing financial statements for the scheme in accordance with generally accepted accounting practice.
(7)
In this section, scheme means a registered scheme (other than a restricted scheme).
If a person ceases to be a climate reporting entity during an accounting period, that person is treated as continuing to be a climate reporting entity in relation to that accounting period for the purposes of this Act and every other enactment.
However, subsection (3) applies if the person (A)—
ceased to be a climate reporting entity under section 461O(1); and
on the balance date, is not a climate reporting entity under section 461O(1) (disregarding the rule in subsection (1)).
If this subsection applies,—
A is not required to ensure the completion of climate statements or group climate statements under any of sections 461W to 461Y and the lodgement of those climate statements in relation to the accounting period:
records required to be kept by A up to the date that A ceased to be a climate reporting entity under section 461O(1) are CRD records for the purposes of sections 461T to 461V.
In any case where a person is, or was, the manager of a registered scheme (and a climate reporting entity under section 461O(2) in respect of the scheme), subsection (1) does not limit—
section 461Q(5) (which applies if the manager and the scheme have different balance dates); or
section 461ZA (which may apply if the manager of a scheme changes during an accounting period).
2
Nothing in this Part requires a climate reporting entity to ensure the completion of climate statements or group climate statements and the lodgement of those climate statements in relation to an accounting period that ended before the accounting period in which that person became a climate reporting entity.
Every climate reporting entity under section 461O(1) must ensure that there are kept at all times records that will enable the climate reporting entity to ensure that the climate statements of the climate reporting entity comply with the climate-related disclosure framework.
Every manager that is a climate reporting entity in respect of a registered scheme must ensure that there are kept at all times records that will enable the manager to ensure that the climate statements relating to the registered scheme comply with the climate-related disclosure framework.
Every climate reporting entity must establish and maintain a satisfactory system of control of the records that it is required to keep under this section.
climate statements of the climate reporting entity means the climate statements or group climate statements that are required to be prepared under any of sections 461W to 461Y
climate statements relating to the registered scheme means the climate statements of the separate funds of the scheme or the climate statements of the scheme that are required to be prepared under section 461Z.
Every climate reporting entity must keep the CRD records in the prescribed manner (if any).
A climate reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000.
The offence in this section is an infringement offence (see subpart 5 of Part 8).
CRD records, or copies of them, must be retained by the climate reporting entity for a period of at least 7 years after the date the records are made.
Every climate reporting entity must make the CRD records available, in the prescribed manner at all reasonable times for inspection without charge, to—
the directors of the climate reporting entity; and
any supervisor (if the climate reporting entity is an issuer of debt securities or the manager of a registered scheme); and
the FMA; and
any other persons authorised or permitted by an enactment to inspect the CRD records of the climate reporting entity or scheme.
Every climate reporting entity must ensure that, within 4 months after the balance date of the entity, climate statements that comply with the climate-related disclosure framework are—
completed in relation to the entity and that balance date; and
dated and signed on behalf of the entity by 2 directors of the entity or, if the entity has only 1 director, by that director.
However, subsection (1) does not apply to—
a climate reporting entity that, on the balance date referred to in subsection (1), has 1 or more subsidiaries; or
an overseas climate reporting entity, unless it is a climate reporting entity under section 461O(1)(a); or
a person that is a climate reporting entity only under section 461O(2).
A company (incorporated in New Zealand and with no subsidiaries) is a large manager of 2 registered schemes.
The company is also a large registered bank, so subsection (2)(c) does not apply. Subsection (1) applies to the company (and see section 461Z, which also applies to the company in respect of its registered schemes).
Subsection (2) applies to every climate reporting entity in relation to a balance date of the entity if the entity has, on that balance date, 1 or more subsidiaries.
The climate reporting entity must ensure that, within 4 months after that balance date, group climate statements that comply with the climate-related disclosure framework are—
completed in relation to the group and that balance date; and
However, subsection (2) does not apply to—
This section applies to every overseas climate reporting entity, unless it is a climate reporting entity under section 461O(1)(a).
The climate reporting entity must ensure that, within 4 months after the balance date of the entity, climate statements that comply with the climate-related disclosure framework are—
prepared for its New Zealand business as if that business were conducted by a company formed and registered in New Zealand; and
However, if the climate reporting entity has, on that balance date, 1 or more subsidiaries, subsection (2) does not apply and instead the entity must ensure that, within 4 months after the balance date of the entity, climate statements that comply with the climate-related disclosure framework are—
prepared for the group’s New Zealand business as if the members of the group were companies formed and registered in New Zealand; and
Subsection (3) does not limit any obligation under this subpart of a subsidiary of the climate reporting entity.
This section applies to every manager of a registered scheme that is a climate reporting entity in respect of the scheme.
The manager must ensure that, within 4 months after the balance date of the scheme, climate statements that comply with the climate-related disclosure framework are—
completed in relation to each separate fund of the scheme and that balance date; and
if any liabilities of the manager and the scheme are not limited to a separate fund, completed in relation to the scheme and that balance date; and
dated and signed on behalf of the manager by 2 directors of the manager or, if the manager has only 1 director, by that director.
However, if the manager was not the manager of the scheme at the start of the scheme’s accounting period, subsection (2) applies to the manager only if the manager of the scheme at the start of the scheme’s accounting period was a climate reporting entity in respect of the scheme.
This section applies if—
the manager of a registered scheme changes during an accounting period of the scheme; and
the person who was the manager of the scheme at the start of the accounting period (the old manager) was a climate reporting entity in respect of the scheme; and
the person who is the manager of the scheme at the end of the accounting period (the new manager) is not a large manager (within the meaning of section 461Q).
If this section applies, the new manager is not required to ensure the completion of climate statements under section 461Z(2) and the lodgement of those climate statements in relation to the accounting period.
Records kept by the old manager up to the date that the old manager ceased to hold office as manager of the scheme are CRD records for the purposes of sections 461T to 461V.
Nothing in this Part prevents any of the following from being combined in a single document:
climate statements and group climate statements that are required to be prepared under any of sections 461W to 461Y in relation to an accounting period and 1 or more members of a group:
climate statements that are required to be prepared under section 461Z in relation to an accounting period and a registered scheme.
This section applies if climate statements or group climate statements referred to in this subpart fail to comply with the climate-related disclosure framework as a result of a failure to comply with an authoritative notice.
A pecuniary penalty order may not be made under section 489 in relation to the failure to comply with the authoritative notice.
Compare: s 461C
A climate reporting entity and every director of the entity commit an offence if—
any of the following fail to comply with an applicable climate standard:
the climate statements of the entity prepared under section 461W:
group climate statements in relation to a group comprising the entity and its subsidiaries prepared under section 461X:
the climate statements or group climate statements prepared by the entity under section 461Y:
in the case of a manager of a registered scheme, the climate statements for any separate fund or for the scheme prepared under section 461Z; and
the entity or the director (as the case may be) knows that the climate statements or group climate statements fail to so comply when those statements are lodged.
A person who commits an offence under subsection (1) is liable on conviction,—
in the case of an individual, to imprisonment for a term not exceeding 5 years, a fine not exceeding $500,000, or both; and
in any other case, to a fine not exceeding $2.5 million.
Compare: s 461I
A climate reporting entity is not required to obtain an assurance engagement in relation to the climate statements or group climate statements that are required to be prepared under any of sections 461W to 461Z.
See Part 1A of the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021, which sets out assurance requirements to apply from a later date.
Every climate reporting entity that is required to prepare climate statements or group climate statements under any of sections 461W to 461Y must ensure that, within 4 months after the balance date of the entity, copies of those statements are delivered to the Registrar for lodgement.
Every manager that is a climate reporting entity in respect of a registered scheme must ensure that, within 4 months after the balance date of the scheme, copies of the climate statements that are required to be prepared under section 461Z are delivered to the Registrar for lodgement.
(1AAA)
This section applies to every climate reporting entity that is required to prepare—
climate statements or group climate statements under any of sections 461W to 461Y; and
an annual report under the Companies Act 1993 or any other enactment.
The climate reporting entity must include, in its annual report for the period ending on the balance date,—
a statement that the entity is a climate reporting entity for the purposes of this Act; and
a copy of the climate statements or group climate statements prepared by the entity under any of sections 461W to 461Y, or the address of (or a link to) the Internet site where a copy of those statements can be accessed.
In this section, annual report includes a concise annual report.
All of the provisions specified in subsections (3) and (4) are Part 7A climate-related disclosure provisions.
A contravention of any of the provisions listed in subsection (3) may give rise to civil liability (see subpart 3 of Part 8), including a pecuniary penalty not exceeding $1 million in the case of an individual or $5 million in any other case.
For the purposes of subsection (2), the provisions are the following:
section 461S (climate reporting entities must keep proper CRD records):
sections 461W to 461Z (climate statements and group climate statements must be prepared):
section 461ZN (climate statements must be lodged).
A contravention of section 461U (CRD records to be kept for 7 years) may give rise to civil liability (see subpart 3 of Part 8), including a pecuniary penalty not exceeding $200,000 in the case of an individual or $600,000 in any other case.
In section 462(1)(ga), after “7”, insert “or 7A”.
After section 468(1)(f), insert:
a Part 7A climate-related disclosure provision:
After section 470(1)(b), insert:
any provision under Part 7A:
After section 474(1)(b), insert:
After section 485(g), insert:
In section 489(3)(b), replace “or 461C” with “, 461C, or 461ZBA”.
“or 461C”
“, 461C, or 461ZBA”
After section 490(2)(f), insert:
a Part 7A climate-related disclosure provision (other than section 461U):
In the heading to section 501, after “reporting”, insert “or climate-related disclosure”.
“reporting”
“or climate-related disclosure”
In section 501(1)(a), replace “and 461H” with “461H, 461W to 461Z, and 461ZN”.
“and 461H”
“461H, 461W to 461Z, and 461ZN”
In the heading to section 534, replace “or financial reporting contravention” with “, financial reporting contravention, or climate-related disclosure contravention”.
“or financial reporting contravention”
“, financial reporting contravention, or climate-related disclosure contravention”
After section 534(1)(ca), insert:
a climate reporting entity has contravened any of sections 461W to 461Z and 461ZN (climate-related disclosure obligations); or
In section 534(3),—
after “FMC reporting entity,”, insert “climate reporting entity,”; and
“FMC reporting entity,”
“climate reporting entity,”
after “(ca),”, insert “(cb),”.
“(ca),”
“(cb),”
In section 534(5), after “FMC reporting entity,”, insert “climate reporting entity,”.
In the heading to section 554, replace “or FMA frameworks or methodologies” with “, frameworks, or FMA methodologies”.
“or FMA frameworks or methodologies”
“, frameworks, or FMA methodologies”
After section 554(1)(b), insert:
the climate-related disclosure framework, either generally or in specified circumstances:
a climate standard:
In section 554(2), after “a financial reporting standard,”, insert “the climate-related disclosure framework, a climate standard,”.
“a financial reporting standard,”
“the climate-related disclosure framework, a climate standard,”
In section 554(3), insert in its appropriate alphabetical order:
climate standard has the same meaning as in section 5(1) of the Financial Reporting Act 2013
In section 556(1)(a), replace “7” with “7A”.
“7A”
Replace the heading to section 561A with “Financial reporting and climate-related disclosure exemptions”.
“Financial reporting and climate-related disclosure exemptions”
After section 561A(1), insert:
(1A)
An exemption granted under this subpart in relation to any provision of Part 7A may, if the FMA thinks fit, apply to an accounting period that commenced before the exemption is granted (including an accounting period that ended before the exemption is granted) if the exemption is granted before the climate statements or group climate statements for that period are required to be lodged under that Part.
In section 561A(2), after “7”, insert “or 7A”.
In Schedule 4, clause 1(1), insert as the last paragraph:
Part 7 provides for transitional provisions relating to Part 1 of the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021.
In Schedule 4,—
insert the Part set out in Schedule 1 of this Act as the last Part; and
make all necessary consequential amendments.
In section 6(1), insert in its appropriate alphabetical order:
assurance practitioner, in Part 7A, means a person who is appointed to carry out an assurance engagement under that Part
After section 461N(1)(b), insert:
to the extent that those statements are required to disclose greenhouse gas emissions, obtain an assurance engagement in relation to those statements; and
Replace section 461S(1) and (2) with:
Every climate reporting entity under section 461O(1) must ensure that there are kept at all times records that will enable—
the climate reporting entity to ensure that the climate statements of the climate reporting entity comply with the climate-related disclosure framework; and
the assurance engagement required by section 461ZD to be readily and properly carried out.
Every manager that is a climate reporting entity in respect of a registered scheme must ensure that there are kept at all times records that will enable—
the manager to ensure that the climate statements relating to the registered scheme comply with the climate-related disclosure framework; and
Replace section 461ZD with:
Every climate reporting entity must ensure that the climate statements or group climate statements that are required to be prepared under any of sections 461W to 461Z are, to the extent that those statements are required to disclose greenhouse gas emissions, the subject of an assurance engagement.
None of the following persons may carry out the assurance engagement:
a director, an officer, or an employee of the climate reporting entity:
a person who is in partnership with, or in the employment of, a person specified in paragraph (a):
a liquidator or a person who is a receiver in respect of the property of the climate reporting entity:
a person who, by virtue of paragraphs (a) to (c), may not carry out an assurance engagement under this Part for a related body corporate of the climate reporting entity.
In the case of a climate reporting entity that is a public entity under the Public Audit Act 2001, the only person who may carry out the assurance engagement is the Auditor-General or any other person who may act as the CRD assurance practitioner under that Act in respect of the assurance engagement.
An assurance practitioner must, in carrying out an assurance engagement under this Part, comply with all applicable auditing and assurance standards.
The assurance practitioner’s report on the climate statements or group climate statements prepared by an entity under any of sections 461W to 461Z must comply with the requirements of all applicable auditing and assurance standards.
If the assurance practitioner’s report indicates that the requirements of this Part have not been complied with, the assurance practitioner must, within 7 20 working days after signing the report, send a copy of the report, and a copy of the climate statements or group climate statements to which it relates, to—
the External Reporting Board; and
in the case of a climate reporting entity that is an issuer of debt securities or a manager of a registered scheme, the supervisor.
An assurance practitioner who contravenes subsection (1) or (2) commits an offence and is liable on conviction to a fine not exceeding $50,000.
Section 461ZD does not prevent the assurance engagement from covering the whole, or other parts, of the climate statements or group climate statements.
If an assurance engagement does cover the whole, or other parts, of the statements,—
the assurance practitioner’s report must separately identify the matters that are required to be the subject of the assurance engagement under section 461ZD; and
this subpart applies, with any necessary modifications, in relation to the whole of the assurance engagement.
In this section, other parts, in relation to climate statements or group climate statements, means any part or parts of those statements that are not required by section 461ZD to be the subject of the assurance engagement.
Every climate reporting entity must ensure that an assurance practitioner appointed for an assurance engagement under this Part has access, at all times, to—
the CRD records of the climate reporting entity or scheme; and
any other documents of the climate reporting entity or scheme that are relevant to the assurance engagement.
If a climate reporting entity contravenes subsection (1), every director of the entity commits an offence and is liable on conviction to a fine not exceeding $50,000.
In any proceeding against a director for a contravention of subsection (1), it is a defence if the director proves that—
the climate reporting entity took all reasonable steps to ensure that subsection would be complied with; or
the director took all reasonable steps to ensure that the climate reporting entity complied with that subsection; or
in the circumstances, the director could not reasonably have been expected to take steps to ensure that the climate reporting entity complied with that subsection.
Compare: 2013 No 101 s 38
An assurance practitioner appointed for an assurance engagement under this Part is entitled to require from a director or an employee of the climate reporting entity the information and explanations that the assurance practitioner thinks necessary for the performance of their duties as assurance practitioner.
A director or an employee who fails to comply with a requirement to provide information or an explanation under subsection (1) commits an offence and is liable on conviction to a fine not exceeding $50,000.
In any proceeding against an employee for failing to comply with a requirement to provide information or an explanation under subsection (1), it is a defence if the employee proves that—
the employee did not have the information required in their possession or under their control; or
by reason of the position occupied by the employee or the duties assigned to them, they were unable to give the explanations required.
Compare: 2013 No 101 s 39
Replace section 461ZN(1) and (2) with:
Every climate reporting entity that is required to prepare climate statements or group climate statements under any of sections 461W to 461Y must ensure that, within 4 months after the balance date of the entity, copies of the following are delivered to the Registrar for lodgement:
the climate statements or group climate statements that are required to be prepared; and
the assurance practitioner’s report on those statements.
Every manager that is a climate reporting entity in respect of a registered scheme must ensure that, within 4 months after the balance date of the scheme, copies of the following are delivered to the Registrar for lodgement:
the climate statements that are required to be prepared under section 461Z; and
Replace section 461ZO(1)(b) with:
either—
a copy of the climate statements or group climate statements prepared by the entity under any of sections 461W to 461Y, together with a copy of the assurance practitioner’s report on those statements; or
the address of (or a link to) the Internet site where a copy of those statements, together with the assurance practitioner’s report on those statements, can be accessed.
After section 461ZS(3)(b), insert:
section 461ZD (parts of climate statements must be subject to assurance engagement):
In section 501(1)(a), after “461Z,”, insert “461ZD,”.
“461Z,”
“461ZD,”
In section 534(1)(cb), after “461Z”, insert “, 461ZD,”.
“461Z”
“, 461ZD,”
Part 8 provides for transitional provisions relating to Part 1A of the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021.
In Schedule 4, clause 1(1), in the last paragraph (as inserted by subsection (1)), make any necessary consequential amendment.
insert the Part set out in Schedule 1A of this Act as the last Part; and
This Part amends the Financial Reporting Act 2013.
In section 3(b), after “financial reporting standards”, insert “, climate standards,”.
“financial reporting standards”
“, climate standards,”
After section 3(c), insert:
provide for standard provisions relating to climate-related disclosure duties under the Financial Markets Conduct Act 2013.
In the heading to section 4, after “reporting”, insert “and other”.
“and other”
After section 4(2), insert:
This Act also provides for various matters relating to climate-related disclosure duties under the Financial Markets Conduct Act 2013, including—
defining key concepts (for example, climate-related disclosure framework, climate statements, and group climate statements); and
providing for the Board to prepare and issue climate standards.
In section 4(3), after “duties”, insert “, and of this Act in relation to climate-related disclosure duties”.
“duties”
“, and of this Act in relation to climate-related disclosure duties”
In section 5(1), replace the definition of applicable auditing and assurance standard with:
applicable auditing and assurance standard, in relation to an audit or an assurance engagement, means an auditing and assurance standard that applies to the audit or the assurance engagement in accordance with the standard
In section 5(1), insert in their appropriate alphabetical order:
applicable climate standard, in relation to a reporting entity and to an accounting period or an interim accounting period of a reporting entity, means a climate standard that applies to the reporting entity and to the accounting period or the interim accounting period in accordance with the climate standard
climate-related disclosure framework has the meaning set out in section 9AA
climate reporting entity has the same meaning as in section 461O of the Financial Markets Conduct Act 2013
climate standard means a climate standard issued by the Board under section 12; and includes an amendment to a climate standard that is issued by the Board
climate statements, in relation to a reporting entity and a balance date, means the climate-related disclosures for the entity as at the balance date, or in relation to the accounting period ending at the balance date, that are required to be prepared in respect of the entity by an applicable climate standard
group climate statements, in relation to a group and a balance date, means the climate-related disclosures for the group as at the balance date, or in relation to the accounting period ending at the balance date, that are required to be prepared in respect of the group by an applicable climate standard
In section 5(1), replace the definition of reporting entity with:
reporting entity—
means an entity whose financial statements, group financial statements, reports, or other information is required by any enactment to comply, or be prepared in accordance, with generally accepted accounting practice or non-GAAP standards; or
means an entity whose climate statements, group climate statements, reports, or other information is required by any enactment to comply, or be prepared in accordance, with the climate-related disclosure framework
In section 5(1), definition of standard, after paragraph (a), insert:
a climate standard; or
After section 9, insert:
In this Act, climate statements, group climate statements, a report, or other information complies with the climate-related disclosure framework only if the statements, report, or other information complies with—
applicable climate standards; and
in relation to matters for which no provision is made in applicable climate standards, an authoritative notice.
After section 12(a), insert:
to prepare and, if it thinks fit, issue climate standards for the purposes of any enactment that requires climate statements or group climate statements, or a statement, report, or other information to comply, or be prepared in accordance, with the climate-related disclosure framework:
Replace section 12(c) with:
to prepare and, if it thinks fit, issue authoritative notices for the purposes of—
the definition of generally accepted accounting practice; or
the definition of climate-related disclosure framework:
In section 14(2), replace “or law” with “law, or sustainable development”.
“or law”
“law, or sustainable development”
In Part 2, replace the subpart 2 heading with:
After section 19, insert:
The Board may issue non-binding guidance that relates to non-financial reporting on 1 or more of the matters in section 17(2)(a)(i) to (iv).
The purpose of the guidance is to facilitate best practice reporting on those matters.
The guidance—
must not be inconsistent with any financial reporting standard or authoritative notice; and
must state that it is non-binding.
Subsection (1)—
applies regardless of whether an Order in Council is made under section 17(2):
does not limit the general powers of the Board.
The purpose of climate standards is to provide for, or promote, climate-related disclosures, in order to—
encourage entities to routinely consider the short-, medium-, and long-term risks and opportunities that climate change presents for the activities of the entity or the entity’s group; and
enable entities to show how they are considering those risks and opportunities; and
enable investors and other stakeholders to assess the merits of how entities are considering those risks and opportunities.
Climate standards may—
have general or specific application:
differ according to differences in time or circumstance.
A climate standard may be expressed to apply to all reporting entities or groups or to specified classes of reporting entities or groups.
A climate standard may specify the accounting periods or interim accounting periods in relation to which the standard applies.
In section 27(2)(a), replace “accounting,” with “climate-related,”.
“accounting,”
“climate-related,”
Repeal section 44(b).
In Part 2, after section 47, insert:
In section 48(1)(a), replace “and section 64(2) of the Friendly Societies and Credit Unions Act 1982” with “section 64(2) of the Friendly Societies and Credit Unions Act 1982, and sections 461P and 461Q of the Financial Markets Conduct Act 2013”.
“and section 64(2) of the Friendly Societies and Credit Unions Act 1982”
“section 64(2) of the Friendly Societies and Credit Unions Act 1982, and sections 461P and 461Q of the Financial Markets Conduct Act 2013”
In section 48(3), replace “8” with “6”.
“8”
“6”
After section 49(h), insert:
amending the amounts specified in sections 461P and 461Q of the Financial Markets Conduct Act 2013:
amending the amounts in the example in section 461Q of the Financial Markets Conduct Act 2013.
After section 51(3)(f), insert:
climate reporting entities; and
In the Schedule, replace the cross-heading above clause 1 with:
In the Schedule,—
insert the Part set out in Schedule 2 of this Act as the last Part; and
This subpart amends the Public Audit Act 2001.
In section 4, insert in their appropriate alphabetical order:
appointed CRD assurance practitioner means a person appointed under section 34A to carry out 1 or more assurance engagements under section 15B
In section 4, definition of Auditor-General, after “appointed auditor”, insert “or appointed CRD assurance practitioner”.
“appointed auditor”
“or appointed CRD assurance practitioner”
After section 15A, insert:
The Auditor-General is, and must from time to time act as, the CRD assurance practitioner for an assurance engagement required for the purposes of Part 7A of the Financial Markets Conduct Act 2013 by a climate reporting entity that is a public entity.
In carrying out an assurance engagement under subsection (1), the Auditor-General must (at a minimum) comply with the auditing and assurance standards that apply to the assurance engagement.
After section 34, insert:
The Auditor-General may from time to time appoint any of the following to act as a CRD assurance practitioner and to carry out, under section 15B, 1 or more assurance engagements required for the purposes of Part 7A of the Financial Markets Conduct Act 2013 by a climate reporting entity that is a public entity, on the Auditor-General’s behalf:
an employee of the Auditor-General:
a person who, under section 461ZD(2) of the Financial Markets Conduct Act 2013, may carry out the assurance engagement.
An appointment must be in writing and may be made subject to any restrictions and conditions that the Auditor-General thinks fit.
The Auditor-General may authorise an appointed CRD assurance practitioner to exercise such of the powers listed in section 34 in relation to the public entity concerned as the Auditor-General specifies in the appointment.
After section 35(2)(a), insert:
the power of appointment of CRD assurance practitioners under section 34A; or
In section 41(1)(c), replace “or not” with “or an appointed CRD assurance practitioner or neither”.
“or not”
“or an appointed CRD assurance practitioner or neither”
In section 42(1), after “15,”, insert “15B,”.
“15,”
“15B,”
In section 42(3), after “auditor”, insert “or an appointed CRD assurance practitioner”.
“auditor”
“or an appointed CRD assurance practitioner”
Replace section 42(4) with:
The public entity must pay any fees to the Auditor-General, or to the appointed auditor or the appointed CRD assurance practitioner, on the completion of the whole or any part of the audit or assurance engagement when requested in writing to do so.
Amend the Act specified in Part 1 of Schedule 3 as set out in that schedule.
Amend the Acts specified in Part 2 of Schedule 3 as set out in that schedule.
s 20(2)
In this Part, climate standard has the same meaning as in section 5(1) of the Financial Reporting Act 2013.
In sections 461OA(1), 461P, and 461Q, a reference to preceding accounting periods may include an accounting period regardless of whether the accounting period commenced before, on, or after the commencement of this clause.
The following provisions of this Act apply to a climate reporting entity under section 461O(1) in respect of accounting periods of the entity that commence on or after the date on which the External Reporting Board issues the first climate standard that applies to the entity:
subpart 2 of Part 7A (which relates to CRD records):
subpart 3 of Part 7A (which relates to preparation of climate statements):
subpart 5 of Part 7A (which relates to lodgement of climate statements).
The provisions listed in subclause (1) do not apply to a climate reporting entity under section 461O(1) in respect of accounting periods of the entity that commence before the date on which the External Reporting Board issues the first climate standard that applies to the entity.
The following provisions of this Act apply to a climate reporting entity under section 461O(2) in respect of accounting periods of a registered scheme that commence on or after the date on which the External Reporting Board issues the first climate standard that applies to the scheme:
The provisions listed in subclause (1) do not apply to a climate reporting entity under section 461O(2) in respect of accounting periods of a registered scheme that commence before the date on which the External Reporting Board issues the first climate standard that applies to the scheme.
s 20J(3)
In this Part,—
commencement date means the commencement date of section 20D of the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
new, in relation to a section of this Act, means the section as replaced or amended by a provision of Part 1A of the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021
Part 7A assurance engagement obligations means—
new section 461ZD (which relates to assurance engagements required for parts of climate statements relating to greenhouse gas emissions); and
new section 461ZN (which relates to lodgement); and
except in clause 95(2), new section 461ZO (which relates to annual reports).
The Part 7A assurance engagement obligations apply to a climate reporting entity under section 461O(1) in relation to the following accounting periods of the climate reporting entity:
an accounting period that commenced before, but ends on or after, the commencement date:
accounting periods that commence on or after the commencement date.
The Part 7A assurance engagement obligations apply to a manager of a registered scheme that is a climate reporting entity in respect of the scheme in relation to the following accounting periods of the scheme:
s 35(2)
In this Part, 2021 Amendment Act means the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021.
Guidance issued by the Board in accordance with section 19A (as inserted by section 28 of the 2021 Amendment Act) may apply in relation to—
accounting periods that commence before, but end on or after, the commencement of section 19A:
accounting periods that commence on or after the commencement of section 19A.
Climate standards issued by the Board may apply in relation to—
accounting periods that commence before, but end on or after, the commencement of this clause:
accounting periods that commence on or after the commencement of this clause.
Authoritative notices issued by the Board for the purposes in section 12(c)(ii) may apply in relation to—
Subclause (2) applies if section 32(1) of the 2021 Amendment Act (which amends section 48(1)(a) of this Act) comes into force before 1 April 2022.
The monetary amounts in sections 461P and 461Q of the Financial Markets Conduct Act 2013 do not need to form part of the first review under section 48(2) of this Act.
Subclause (4) applies—
if the monetary amounts in sections 461P and 461Q of the Financial Markets Conduct Act 2013 do not form part of the first review under section 48(2) of this Act:
despite the date on which section 33 of the 2021 Amendment Act (which amends section 49 of this Act) comes into force.
The Minister’s recommendation (if any) under section 48(1)(b), after conducting the first review, must not include a recommendation for the purposes of section 49(i) or (j).
s 43
In section 4(1), replace the definition of entity with:
entity, in relation to a group, means—
a reporting entity within the meaning of paragraph (a) of the definition of that term in section 5 of the Financial Reporting Act 2013; or
a subsidiary (within the meaning of section 5 of the Financial Reporting Act 2013) of a reporting entity referred to in paragraph (a)
After section 211(1)(c), insert:
if the company is required to prepare climate statements or group climate statements under section 461W or 461X of the Financial Markets Conduct Act 2013 for the accounting period, include the matters required by section 461ZO(1) of that Act; and
In section 4, definition of financial markets participant, after paragraph (b)(iv), insert:
a climate reporting entity (within the meaning of section 461O of the Financial Markets Conduct Act 2013); and
In section 238(1)(b), replace “from being— ” with “ — ”.
“from being— ”
“ — ”
Replace section 238(1)(b)(i) with:
from being—
an FMC reporting entity (and, consequentially, a climate reporting entity) for the purposes of the Financial Markets Conduct Act 2013 by virtue of section 451(1)(h) of that Act; or
a climate reporting entity for the purposes of the Financial Markets Conduct Act 2013 by virtue of section 461O(1)(c) of that Act:
In section 238(1)(b)(ii), before “an issuer”, insert “from being”.
“an issuer”
“from being”
12 April 2021
Introduction (Bill 30–1)
15 April 2021
First reading and referral to Economic Development, Science and Innovation Committee
16 August 2021
Reported from Economic Development, Science and Innovation Committee (Bill 30–2)
28 September 2021
Second reading
19 October 2021
Committee of the whole House (Bill 30–3)