“Broadly educative and constructive approach" – FMA on enforcing climate-related disclosures
“Broadly educative and constructive approach” – FMA on enforcing climate-related disclosures | Insurance Business New Zealand
Insurance News
“Broadly educative and constructive approach” – FMA on enforcing climate-related disclosures
The regulator has released its monitoring oversight plan for the next three years
Insurance News
By
Kenneth Araullo
The Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko laid out its approach for enforcing climate-related disclosures (CRD) as New Zealand moves towards the new regime.
FMA CRD manager Jenika Phipps said that the regulator’s monitory oversight plan for the next three years has been published, detailing the monitoring and enforcement regulations that companies in the country can expect.
“New Zealand is already well down the path, being one of the first counties in the world to introduce mandatory climate-related disclosures for our biggest fund managers, banks, insurers and listed companies,” Phipps said in an article from the FMA. “Now that the climate standards have been developed and published, it’s our job here at the FMA to monitor and enforce compliance.”
According to the FMA, the climate-related disclosures regime is designed to:
Ensure that the effects of climate are routinely considered across businesses, including insurance underwriting decisions
Help climate reporting entities (CREs) better demonstrate responsibility and foresight in their consideration of climate issues
Lead to more efficient allocation of capital and help the transition to further sustainability
Phipps said that the first years of the regime will have a more “helpful” outlook, and that firms can expect the FMA to take a “broadly educative and constructive approach,” supporting CREs and encouraging good practices development. It begins with the issuance of high-level guidance on compliance expectations and will move towards a “more proactive, regulatory” role once the regime becomes more established.
Phipps said that the FMA expects to see the first climate statements being lodged in early 2024. CREs are also expected to have made reasonable efforts to comply with their CRD regime obligations by then. Climate statements are also expected to be lodged within four months of its balance date unless a formal exemption has been requested of the FMA. This is important, Phipps stressed, so investors and stakeholders can have timely access to these climate statements.
Timely feedback can also be expected from the FMA regarding these climate statements to encourage good practice and support improvements. Phipps said that the FMA only expects to review supporting records if there are areas where there might have been significant non-compliance.
“We’ll also keep engaging with CREs and key stakeholders, issuing guidance and publishing factsheets as required,” Phipps said. “And while enforcement action is still an option at this early stage, we only expect to be heading down this path where there has been serious misconduct, such as failure to produce a climate statement or where a statement is false or misleading.”
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