A plume of smoke rises out of an industrial chimney into the sky, in Copenhagen, Denmark. Photo: Supplied/ Unsplash - Mudit Agarwal
The government has gutted New Zealand's once world-leading climate disclosure law, just months after officials showcased it to the United Nations as evidence of "significant progress" on climate action.
The climate-related disclosures (CRD) regime was introduced by the Labour-Green government in 2021, making New Zealand the first country to require major banks, insurers and listed companies to publicly report how climate change could affect their bottom lines.
The law aimed to make climate risk a normal part of business, investment and lending decisions - shifting it out of sustainability reports and into mainstream accounting.
When it came into force in 2023, the move was hailed internationally as a model of transparency.
The first reports, published in early 2024, were meant to help investors see which companies were prepared for a warmer, riskier world.
But soon after, companies complained the regime was too costly and complex. Turners Automotive said its first report, only seven pages long, cost about $1 million to produce once new systems were built to track the lifetime emissions of every car sold.
Other companies complained the regime was too onerous compared with Australian companies of a similar size; and they feared prosecution from sharing climate information.
While many companies spent far less than Turners - some under $200,000 by doing the work in-house - officials at the Ministry of Business, Innovation and Employment (MBIE) began consulting on changes to the law.
By late 2024, MBIE released a discussion document saying the regime's costs were prohibitive.
Early in 2025, ministers were considering proposals to halve the number of companies required to report.
Those plans were confirmed today, when the government proposed sweeping changes, including upping the reporting threshold for listed companies from $60 million to $1 billion in market value.
All 22 KiwiSaver and investment-scheme managers were also exempted, leaving just 76 entities required to make climate-related disclosures, down from 164.
Commerce and Consumer Affairs Minister Scott Simpson said the move was designed to support business growth and New Zealand's capital markets.
He said while the intentions behind the law were solid, the rules proved "too onerous" and had become a deterrent for potential listers.
Jessica Palairet, Executive Director at Lawyers for Climate Action NZ, said the decision was "short-sighted."
"New Zealand led the world by introducing the first climate related disclosures regime in 2022," Palairet said.
"We now have the dubious nod of likely becoming the first country in the world to weaken our climate related disclosures regime, just two years into its adoption and without strong evidence that this is necessary or will strengthen our capital markets."
Palairet argued the retreat wrongly cast transparency as harmful to growth and left the country out of step with and less inclusive than key partners, including Australia.
The rollback comes shortly after officials celebrated the policy on the world stage.
In New Zealand's first Biennial Transparency Report to the UN, submitted late last year as part of its obligations to the Paris Agreement, the CRD framework was held up as evidence of embedding climate considerations in the financial system.
Documents released to RNZ under the Official Information Act show officials listed the law's introduction first on a list of areas of "significant progress" when drafting the report. They said by making climate risk part of corporate decision-making, the regime "helped ensure more efficient allocation of capital to support the transition to a low-emissions economy."
It was also highlighted as one of the country's "key domestic strengths" in meeting Paris Agreement obligations-and was used to help reinforce New Zealand narrative of itself as a constructive, reliable partner on tackling climate change.
The Biennial Transparency Report was drafted at the same time as the discussion document proposing changes to the disclosures regime.
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