New Zealand: Sustainability reporting leaps forward with launch of global standard setter

Content Summary

  • CPA Australia welcomes launch of International Sustainability Standards Board.
  • The ISSB will elevate sustainability reporting to the status of financial reporting.
  • New Zealand must “get on board” to ensure our financial markets are not left behind.

CPA Australia, a professional accounting body representing accountants in New Zealand and Australia, says today’s launch of the International Sustainability Standards Board (ISSB) will elevate the status of sustainability reporting, and is urging New Zealand to “get on board”. 

“Historically, there’s been a spaghetti bowl of global sustainability initiatives, frameworks and institutions,” said CPA Australia New Zealand Country Head, Rick Jones. “This has slowed down progress on sustainability reporting. 

“Over the past few years, we’ve seen a rapid shift towards technical alignment of the leading sustainability frameworks. Today’s launch globalises the international sustainability reporting infrastructure.

“The ISSB will give investors, businesses, governments and regulators a global institution to rally around. This will elevate sustainability reporting to the same level of rigour and acceptance as financial reporting. This news will be manna from heaven for investors, for whom sustainability data – particularly climate-related information – has long been a blind spot.”

Jones said the ISSB launch highlights an accelerating interest among legislators and regulators in addressing climate change issues, with New Zealand “well ahead of the curve” in this respect.

The New Zealand Parliament will soon begin debating the Companies (Directors’ Duties) Amendment Bill, which will allow directors to take into account wider issues than the best interests of their company and shareholders when making decisions.

The Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill is currently before Parliament. If implemented, this Act will require significant New Zealand finance sector entities to produce annual climate statements.

In addition, New Zealand’s External Reporting Board has released for public comment its first tranche of climate-related disclosure standards.

“These are important matters for accounting professionals and their clients, and CPA Australia will be monitoring developments, consulting with the profession and making submissions.”  

Following today’s launch, the ISSB will be the primary global sustainability standard setter. It will sit alongside the International Accounting Standards Board, the body that develops and issues international financial reporting standards. 

“By building on existing frameworks and embedding institutional connectivity, the sustainability and financial reporting frameworks will be consistent, compatible and complementary. This is a considered design response and reflects the growing maturity of the global sustainability discourse.”

The ISSB will be staffed by employees from existing international sustainability organisations. “Sustainability issues and solutions are emerging rapidly and the ISSB needs to be ready to start quickly. Staffing the ISSB from existing global institutions will get it off to a running start.”

CPA Australia is urging the New Zealand Government to “get on board” with the ISSB.

“The International Organisation of Securities Commissions has endorsed the ISSB, meaning that the standards it issues will become the global benchmark for securities regulators world-wide. It’s vital that both governments and all relevant regulators take the necessary action to incorporate the ISSB standards into our corporate reporting systems.

“If our country doesn’t get on board, the reputation of our financial markets may be damaged, companies may find their share price impacted and capital raising in international markets could become harder.”

The ISSB will develop standards which provide a common baseline of information that jurisdictions can adapt to meet their requirements. This will enable global benchmarking, while allowing New Zealand to maintain requirements specific to their local market conditions.

CPA Australia participated in the global consultation preceding the launch of the ISSB. We made a submission and provided expert commentary on the potential design of sustainability standards and the underlying conceptual framework.

 

Media contact

Rick Jones, New Zealand Country Head, 021 1901 039 or Email: [email protected]