Fund manager compliance expert collective, Boutique Investment Group (BIG), has pushed again for a longer lead-in time before funds must include carbon emissions assurance in climate reports.
Last month the External Reporting Board (XRB) proposed a one-year delay to mandatory audited carbon assurance for entities captured by the climate-reporting legislation, among other relief measures.
Auditing of greenhouse gas emissions (including ‘Scope 3’ downstream data) was originally slated for inclusion in the current financial year for the 200 or so NZ climate-reporting entities.
But in its submission on the XRB plan, BIG calls for a three-year hiatus on compulsory emissions assurance for fund managers, citing sketchy carbon data from underlying companies and dodgy gap-filling estimates used to populate models.
“lmprovements to both of these issues are likely in late 2025 through to 2026,” the submission says.
Prior to the XRB reporting relief proposals, BIG asked government to defer carbon assurance for fund managers captured by the legislation until at least 2026 when similar obligations apply to Australian counterparts or “if not indefinitely”.
Given the paucity of corporate carbon information in most jurisdictions and volatility in data that is available, the submission says including third-party validation of fund emissions profiles could be misleading for consumers.
“If we publish such inconsistent and variable data, assurance is likely to be counterproductive. While an auditor can verify our methods, it won’t make the data any more accurate,” BIG says. “Assurance may falsely reassure the ‘end user’ about the reliability of speculative information.”
Over time the data issues, and cost of assurance, should improve, the submission says.
In the interim, BIG says fund managers would be “happy to publish metrics with data quality warnings, while we are delaying assurance”.
The industry body – chaired by Nikko Asset Management general counsel, Simon Haines – represents 23 non bank-owned fund groups.
Fund managers with $1 billion or more under management fall under the climate-reporting legislation, which came into effect in the previous financial year.
While BIG says the other XRB relief proposals are welcome, the troublesome start for the world-first climate disclosure regime in NZ suggests the regulations require further attention.
“ln addition to the proposed amendments to the adoption provisions, we believe that the challenges and lessons learned from the initial climate reporting process necessitate a comprehensive review of the overall regulatory framework for climate reporting.”
The XRB consultation on its proposed amendments closed for submissions on October 30.