Climate reporting across the Tasman: Lessons for New Zealand boards

Australia’s shift to mandatory climate reporting is already changing how boards across the Tasman talk about strategy and risk.

For New Zealand directors operating under the Climate-related Disclosures (CRD) regime, the Australian experience is a useful mirror: it shows where climate reporting creates real governance lift and where boards can get trapped in a compliance cul-de-sac.

Canbury’s recent review of 39 Australian asset owners and managers, Meaningful climate reporting in Australia, covering 70% of professionally managed assets, found average alignment with the new standards of just 31%, with governance the strongest pillar (59%) and metrics and targets the weakest (23%). The pattern is telling – committees, charters and delegations are the easy part; turning climate into capital discipline is the work still to do.

That theme ran through a recent webinar with Canbury’s Will Martindale, Florence Van Dyke and Jackson Rowland, joined by Evenlode Investment’s stewardship lead Sawan Wadhwa. Van Dyke summed up the readiness picture as “governance first . . . and data later”: many organisations have board oversight in place but are still building the systems and confidence to produce decision-useful numbers. Wadhwa described their sequence: governance, then emissions analysis, before moving on to targets and scenario analysis. Wadhwa stressed a simple foothold that moved the dial for their board: apply a carbon price overlay (say $50/$75/$100 per tonne) to the portfolio to quantify exposure and prioritise engagement. It isn’t elegant macro-modelling, but it is the kind of practical quantification directors on which directors can act.

If there was a single caution for boards, it was about misplaced precision. “Scenarios are not forecasts,” Martindale noted; they are stress-tests to expose where strategy could bend or break. The trap is spending heavily on intricate modelling that never reaches the investment committee. The better starting point is two or three well-justified pathways, tied to real decisions – risk appetite settings, hurdle rates, capex sequencing, covenant headroom – and reported back to the board with the same cadence and clarity as other material risks.

That was a second finding in Canbury’s analysis: risk management was a mid-pack performer (41% aligned), but only a small minority described an “active” climate-risk process with criteria for likelihood and magnitude, escalation triggers and ownership. The advice for directors here and in Australia was to integrate, not silo. Climate should show up in the same reports and thresholds used for credit, liquidity, operational and conduct risk.

The credibility gap, on both sides of the Tasman, often sits where climate meets money. Canbury found few Australian entities had yet linked executive remuneration to climate outcomes or earmarked financial resources to respond to scenario findings. That matters because it’s where oversight becomes consequence: targets that move pay and budgets get traction; those that don’t tend to remain worthy statements. Rowland’s framing is useful for boards trying to break that logjam: don’t treat climate reporting as “a record of our past – use it as a lens into the future of the business.” In practice that means asking for the P&L, balance-sheet and cash-flow effects of climate risks and opportunities, deciding which ones are material and then wiring those judgements into incentive design and capital allocation.

What’s different for New Zealand?

Our regime is already bedded in for listed issuers and large financial institutions, so most boards have ticked the governance boxes and run at least a first cut of scenarios.

The next step is sharpening consequence: clarifying how and where scenario outputs change strategy, spend and sequencing. Australian preparers are being pushed to quantify financial effects explicitly under AASB S2; New Zealand investors increasingly expect the same. Australia’s regime includes a temporary “safe harbour” for forward-looking elements such as Scope 3 and scenario analysis, meaning civil actions are limited during the transition period. New Zealand’s regime has no such immunity.

In both markets the lesson for boards is the same: focus on the substance of disclosure, not the legal shelter. That is especially true for transition-heavy sectors where climate assumptions (carbon prices, technology costs, policy trajectories) can swing valuations materially. If an assumption would change a project’s go/no-go, bring it into the open. If it wouldn’t, say why.

Another area where Australian experience is instructive is pace versus proof. Many boards are waiting for “perfect” Scope 3 numbers before engaging, yet Wadhwa’s point was that you often need a first-principles emissions view to find where the real financed-emissions risks lie, and that work can be good enough, quickly, to guide engagement and portfolio decisions. In other words, use directional analysis to prioritise; reserve deep measurement for the exposures that matter most. That aligns with the most practical Australian implementations Canbury has seen: start with governance you already have, get a defensible emissions baseline, run simple scenarios and iterate.

Both markets are also converging on the next horizon: nature and just transition. Several speakers flagged that the governance muscle developed for climate such as scenario discipline, risk integration and stakeholder engagement will carry across as nature-related reporting lands. For New Zealand, with our economy’s exposure to land, water and biodiversity, boards may find nature metrics bite closer to core value and sooner than expected. The lesson from the Australian “governance first, data later” arc is not to wait for the perfect framework: build the board-level scaffolding now (roles, reporting, risk appetite), then scale data as materiality demands.

Where New Zealand directors should focus next

1. Embed in strategy and capital: Insist that climate shows up where money is set; ask management to translate scenarios into capital guardrails (which investments to accelerate, defer, or redesign).
2. Integrate into risk appetite: Add climate thresholds and key risk indicators; make clear who owns the response if a variable trips a line.
3. Tie incentives to outcomes: Link a sensible slice of STI/LTI to measurable results (e.g., Scope 1+2, financed-emissions pathway, climate-adjusted return on invested capital) with clear rationale.
4. Keep scenarios simple: Decision-ready, not overly precise; avoid false precision, favour relevance.
5. Communicate like strategy: Engage investors and stakeholders as you would for any other major shift: why this, why now, what it means for value and cash flows.

For all the technical detail, the most reassuring message from across the Tasman is that boards don’t need to boil the ocean to make progress. “Governance first . . . and data later” is not an excuse to delay, it’s a sequence. Get the oversight right; quantify what matters enough to move capital; make risk appetite explicit; then let the data mature in line with materiality. The reward for that discipline is not a cleaner report, it’s a clearer strategy.

And if you’re choosing one question to open your next board discussion, make it this: if our climate analysis doesn’t change how we invest, price, or pay, what would it take for it to do so?