In the many conversations and check-ins we have been having over the past two months, the consistent theme has been the climate and ESG-related work that clients are grappling with: not surprisingly, this is affecting all our clients, though in a range of different ways.
In parallel, many of our Consultants are showing a real interest in this space, and many are in fact helping clients with ESG/Climate as part of their current roles, so the SHIFT Community are organically building and uplifting our skills and capacity. We have also been developing relationships with experienced consultants in the area and investing and evolving our thinking about how we, and complementary partners, can support clients through regulatory and non-regulatory pressures and underlying transformations required to meet these coming changes.
For businesses subject to disclosure requirements under the Aotearoa New Zealand Climate Standards (NZCS 1,2 and 3) (which take effect for accounting periods that start on or after the 1 January 2023), making headway can be daunting. A few places to start could be:
- Record keeping: Check and uplift current record keeping practices as required to address requirements of the climate disclosure regime for the first reporting year. Although specific regulations are yet to be published, building on existing practices and considering the FMA’s preliminary guidance should be progressed.
- Obligations Matrix: An Obligations Matrix to map the content of the reporting required under Climate Standards might be a useful starting point.
- Director Competence and Training: The Climate Standards include reporting on how appropriate skills and competence are accessible to governing body/ies. Building competence will take time: a starting point may be to assess existing knowledge and understanding and starting on introductory training, by covering the Climate Standards themselves.
- Climate Standards Project Team: Delivering reporting under the Climate Standards will require multi-disciplinary involvement and embedding of new practices and processes. Both an Executive and Director sponsor could be an essential starting point.
- Climate Standards / Sustainability Change Project: Consider looking beyond the first year of Climate Standards to the second year requirement to disclose a transition plan and increasing levels of quantitative disclosures. For some organisations, this may indicate a broader sustainability change project. Taking a broader approach could also prepare the business for further obligations and developments to come in the broader ESG space. Numerous initiatives are underway including voluntary sustainability reporting ,nature-based disclosures and we also expect uplifts in standards whether from further regulation / FMA guidance or overseas initiatives.
- Data requirements: data requirements / data architecture will be required. It will be useful for your Project team to familiarise themselves with the metrics required to be disclosed by all entities and consider what industry-specific metrics are or will be used and disclosed under the Climate Standards. Assurance will be required on GHG emissions disclosure from the first reporting period ending after 27 October 2024. XRB has published papers on GHG Assurance.
If you would like to chat about how SHIFT might be able to help, please contact us.