The Boutique Investment Group (BIG) has lobbied government to delay carbon emission assurance reporting for fund managers until Australia implements similar rules or “if not indefinitely”.
In a letter addressed to Simon Watts and Andrew Bayly – Ministers of Climate Change and Commerce, respectively – BIG says the looming emission assurance regime will be expensive, inaccurate and unlikely “to achieve anything for the client or the planet”.
NZ licensed fund managers with $1 billion or more in assets will have to include third-party auditing of portfolio carbon emissions in mandatory climate reports for financial periods ending from October 27 this year.
While the carbon-auditing obligation applies to all 200 or so entities captured by the climate-reporting legislation, BIG argues investment firms face particular difficulties in complying.
“Fund managers are not reporting their own emissions but the aggregate of the entities they invest into,” the letter says. “… There [is] a wide range [of] inconsistencies with data collection methods and level of disclosure available globally for investee companies. This makes assurance difficult, counterproductive and in many cases impossible.”
As well, BIG says there is a dearth of qualified carbon auditors in NZ while the emission assurance process would substantially add to the time and cost of producing climate reports.
The first tranche of mandatory climate reports landed this year with fund managers filing their inaugural compliance documents in July.
Last week BIG also released a submission arguing against a Financial Markets Authority (FMA) proposal to include reference to the climate reports in other fund disclosure documents.
But the emissions-assurance issue is pressing with a “time sensitivity”, the letter says, as managers enter the first year where portfolio carbon-auditing comes into play.
BIG, chaired by Simon Haines, also suggests NZ – the first country in the world to introduce mandatory climate-reporting – should coordinate the compliance regime with other jurisdictions.
“… we ask that this requirement be deferred, at a minimum, until one year post the period that Australian fund managers are required to obtain assurance, if not indefinitely,” the letter says.
Australian fund managers with A$5 billion plus under management will have to provide climate reports beginning in the July 1, 2026 financial year under a law passed by parliament this month.
However, compulsory assurance for Australian climate-reporting entities begins from the 2030 financial year.
BIG represents compliance experts from about 20 NZ fund managers.
“We are aware that some banks also share the views that are expressed in this letter,” the group says.