Climate-related reporting is nothing new, but changes here in Aotearoa New Zealand mean something that was once voluntary is now a legal requirement for many companies.
The New Zealand Climate Standards help disclosure users, whether they’re investors, analysts or other stakeholders, to understand how climate change is impacting a business and how it may do so in the future, by bringing more consistency to climate reporting and supporting capital allocation decisions. These standards place a higher bar on ensuring companies have accountability and the processes in place to test whether strategies are resilient to the challenges we face as the climate continues to change and the world responds.
For companies taking the plunge for the first time, key challenges are likely to include measuring your company’s emissions footprint, including the footprint of your supply chain, and putting a dollar figure on things with long term uncertainty, and creating and applying climate scenarios.
Getting your hands on good climate data is important. Good data makes for well-informed risk assessments and helps drill down into what could plausibly happen in terms of changes to things like rainfall, the intensity of extreme weather events, sea level, wind, temperature and the number of hot days.
Luckily there’s a bunch of new data coming out from NIWA this year, and we know there are others who, like us, are looking forward to this. We expect this to be another useful input to build knowledge and help the assessment of impacts by having access to more granular local climate information.
While all of this may feel daunting, the key is to just start by starting, get clear on what you have in place and the gaps. Reach out to others to learn – we are all on a journey. There are many collaborations such as some of the local climate sector-specific forums. Check out guidance from the External Reporting Board, where you will find some great examples and guidance documents.
Meridian made the move early. We first made our first voluntary climate-related disclosures in 2019 and have done so every year since. These were initially reported in accordance with the recommendations of the Taskforce on Climate-related Financial Disclosures; then, in 2023, in substantial alignment with the Aotearoa New Zealand Climate Standards.
It was a move we made recognising the importance of being open and transparent about the resilience of our business, our strategy and products in the face of a changing climate.
We recognised that businesses like ours need to be ready to see a whole load of change we haven't seen before, and that investors and other audiences need to be confident that our businesses are ready and able to withstand them.
Part of preparing for this change is embedding knowledge and practices across our business, and that’s an ongoing focus at Meridian. The reporting underpins this focus by being honest about our performance, and by showcasing the progress we are making.
We have also made a key change in the past year with the move to mandatory reporting, adding a financial climate accounting role (Senior Accountant - Climate Lead) to our Strategy and Finance team. It’s an example of a development that has strengthened our ability to mature our practices and ensure accurate financial measurement of climate-related risks and opportunities.
However you do it, building the right team is key. Whether it’s in-house or external capability, invest in the necessary resources and talent to build the muscle of creating and applying climate scenarios, putting the methodologies in place to assess your risks and opportunities, so you can accurately communicate your progress.
And embrace the change. It’s an important one with good rationale behind it. Remember – everyone is on a journey – start by starting.
Tina Frew is Meridian’s Head of Sustainability
