Just four KiwiSaver providers emerged from the first round of climate-related disclosures (CRD) last year with best-practice credentials, according to a first-of-a-kind analysis.
The KiwiSaver study carried out by consultancy firm, Mosaic, found four large schemes – including three bank-owned entities – filed the inaugural CRD documents without relying on first-year relief measures.
And the quartet of CRD over-achievers, dubbed as ‘leaders’ in the Mosaic report, “often exceeded requirements by providing additional transparency (e.g., by publishing formulas when not explicitly required)”.
Tracey Berry, Mosaic partner, says in the paper that the “findings reveal varying levels of disclosure maturity” among the 17 schemes considered, sorted into three categories of leaders, compliers or followers. (In total, 23 KiwiSaver providers filed CRD reports last year.)
“While our Leaders exceed regulatory requirements by providing clear, quantitative insights, our Followers lag behind, highlighting the need for stronger climate maturity and more consistent, decision-useful disclosures,” Berry says.
Overall, the leading CRD KiwiSaver schemes disclosed six or seven of the climate metrics (out of a maximum of seven) while the average provider supplied four or five and laggards between one and three.
Berry says “some variability” in climate-reporting would be expected given the embryonic nature of the regime.
“However, as local and international regulatory landscapes evolve, so too will the expectations and requirements for climate disclosures,” she says. “In this fluctuating global environment, we consider it critical that New Zealand remains committed to transparent, decision-useful climate disclosures.”
The study found the KiwiSaver cohort in the study struggled, in particular, with greenhouse gas (GHG) disclosures with only 41 per cent supplying ‘scope 3’ emissions data.
“This suggests that while there is a growing focus on transparency in GHG emissions reporting, challenges remain in Scope 3 disclosure, likely due to data availability, measurement complexity, and reliance on external sources,” the Mosaic paper says.
Following feedback on the first-year CRD process, the External Reporting Board (XRB) – the government-owned accounting standard-setting body – proposed a raft of relief measures for climate-reporting entities.
As well as pushing out the deadline for providing GHG data assurance, the XRB also flagged the potential introduction of a “differential” climate-reporting system based on entity size.
The CRD regime applies to about 200 businesses including banks, insurers, most largish NZX-listed companies and licensed fund managers (including KiwiSaver schemes) with at least $1 billion of assets.
Fund managers have argued for at least a three-year exemption from scope 3 GHG assurance obligations to align with offshore developments, especially in Australia.
The Mosaic KiwiSaver analysis confirms that “that many in our sample found it difficult to obtain specific and reliable data for both financed emissions and metrics for climate-related risks and opportunities”.
“Comparability across MIS was hindered by inconsistencies in methodologies and data sources, making it difficult for stakeholders to benchmark climate-related risks and opportunities effectively,” the report says. “Despite these challenges, our research highlights best practices from leading CREs and offers practical recommendations to improve disclosure quality, data standardisation, and regulatory alignment over time.”
The Mosaic report was produced along with legal firm, MinterEllisonRuddWatts.