New Zealand is a leader in the world in requiring large financial institutions, companies and fund managers to make climate financial disclosures. [Although the current Government is consulting on changing this, proposing higher thresholds of assets and revenues for disclosure, but we will still be known as the 'first'].
While the climate related financial disclosure documents aren't really a key metric at this stage in how we assess our fund managers, Carey attended a one day course in early December 2024 to learn about the disclosures. The course was run by INFINZ and was called 'Climate Statement Analysis 101'.
Most of the attendees were employees of large companies, fund managers and banks, but I learned a lot (and managed to contribute). The course was a workshop in all ways.
We were sent three Climate Related Financial Disclosures prior to the workshop to read - Infratil, Ryman Healthcare and Z Energy. Ryman's disclosure was incorporated as part of their Annual Report, Z Energy had a nice glossy 25 page document and Infratil had a dense and detailed 43 page report.
Fortunately I can skim read to find information when I need to (as my preparation was not detailed enough - I didn't realise we were going to be looking for exact information in the workshop).
The Infratil document provided very indepth information (almost too much information), with the Ryman information being quite a once over lightly, and the group that were working on the Ryman document kept on answering 'no information' to the questions.
Our group had Infratil and we learned so much about Infratil and their operations by studying the report.
More importantly though, these are the main points that came out of the workshop:
Climate Related Financial Disclosures will be a learning curve for all organisations as they work out how to fulfil the requirements of the legislation. It will take time to work out what kind and how much information to report.
The reports are mainly qualitative, explaining what they are doing, rather than reporting Greenhouse Gas Emissions. GHG are a backwards looking measure and the Disclosures are designed to be more forward looking.
There are three scenarios that each report has to report on: a. Orderly 1.5°C warming by 2100, b. Disorderly 2.0°C warming by 2100 and Hothouse, >3°C warming by 2100. Each organisation can then add another scenario for example 'too little too late (2.5°C.)
Mandatory Disclosure is not about Mandatory Action.
The CRFD are designed to be analysed in conjunction with Annual Reports and other public disclosures, not really as stand alone documents.
A focus of the reports is on the RISKS and the OPPORTUNITIES for each organisation.
We had a fascinating speaker (or two) on the actual impacts of climate change, including things like the fact that Cocoa, Coffee, Olive Oil and Rice are all increasing in price because of climate changes, and that when clay soils dry out they become unstable.
Although we are unlikely to be analysing climate related financial disclosures, the workshop has given us a good understanding of the breath of the information that might be disclosed and also how it relates to potential action.
