Sustainability reporting: A tale of two jurisdictions

As climate-related disclosure regimes roll out across the globe, the contrast in how countries approach sustainability reporting is becoming more evident.

Two countries that illustrate this divergence clearly are New Zealand and the United States. While both have trading and operating environment commonalities, their reporting maturity, drivers and cultural context tell very different stories, each with lessons for directors.

Reporting uptake: mandatory vs momentum

In New Zealand, we often take pride in “punching above our weight”, particularly with the introduction of mandatory climate-related disclosures for Climate Reporting Entities (CREs). However, according to KPMG’s 2025 survey just 57 of New Zealand’s top 100 entities (up from 50 in 2022) reported on environmental, social and governance (ESG) or sustainability performance, and only two of the seven new sustainability reporters used the XRB Climate Standards. This underscores the importance of the broader ecosystem that supports sustainability practice (not just regulation).

In countries with stronger market incentives, such as investor scrutiny and competitive ESG benchmarking, uptake tends to be more rapid and substantive. By contrast, New Zealand’s smaller, less investor-driven market often treats reporting as a compliance exercise rather than a value-creation tool. This mindset gap can lead to limitations in both the ambition and depth of reporting.

The U.S. experience, as further highlighted in the 2025 Reuters State of Sustainability Reporting report, offers insights into what market-led uptake can look like. Within the report it noted that the International Federation of Accountants’ State of Play report shows that 99 per cent of the largest 100 U.S. companies surveyed reported on sustainability. A range of frameworks were used including the Task Force on Climate-Related Disclosures framework, United Nations Sustainable Development Goals and Global Reporting Initiative. Of those that undertook reporting, 93 per cent published separate sustainability reports (not just in annual reports), and 87.9 per cent had some level of third-party assurance.

While this is not directly comparable to the KPMG New Zealand survey, it shows the impact that market forces alone can drive.

Quality and assurance: a work in progress for NZ

Assurance remains one of the weakest areas of New Zealand’s sustainability reporting landscape. Less than a quarter of New Zealand entities currently obtain assurance over any part of their sustainability data. In comparison, the key trading partner average sits at 67 per cent, nearly three times higher according to KPMG’s benchmarking across Australia, China, Japan, South Korea, the UK, and the US.

This assurance gap presents a credibility risk. Without third-party validation, sustainability claims may be viewed with scepticism by international partners and regulators. It also affects internal governance; boards may lack confidence that reported data is robust or decision useful. As CREs face mandatory assurance from 2025, there is an opportunity for directors to lead on investing in the systems and processes needed to produce auditable disclosures.

Materiality matters

Materiality assessments have grown in use, with 43 of the 57 top 100 New Zealand reporting entities now identifying material topics, an increase from 35 in 2022. However, the majority use “impact materiality” only, focusing on how the organisation affects people and the planet. KPMG notes that New Zealand lags behind many Asian trading partners in adopting “double materiality”, which considers both outward impacts and inward financial risk.

Meanwhile, in the U.S., there are clear signs that double materiality is being embraced. Paypal’s Head of Global Sustainability described their experience with double materiality as “transformational” for identifying ESG risks and opportunities, according to the Reuters report. Directors in New Zealand would do well to ask: Are we surfacing sustainability risks that affect enterprise value, or merely reporting for optics?

New Zealand’s blind spot?

New Zealand’s low rate of nature-related reporting is striking with only 19 organisations identifying loss of biodiversity/nature as a risk, according to KPMG. While the U.S. report doesn’t explicitly cite Task Force on Nature-related Financial Disclosures (TNFD) uptake, leading companies like DuPont and Whirlpool are embedding nature into product-level assessments through tools such as portfolio sustainability assessments and lifecycle analyses. These approaches integrate nature alongside climate, circularity, and water as core metrics, signalling a more advanced operationalisation of nature-related risks and opportunities.

With frameworks like TNFD rapidly gaining traction globally, New Zealand entities risk falling behind the curve especially given our reliance on natural capital in primary industries and tourism. This is not an abstract reporting issue; it is a strategic risk.

Governance and board oversight

Board-level leadership on sustainability is growing but still limited. Only 25 of the top 100 New Zealand entities had a dedicated board and/or leadership team sustainability leader, and just 10 have linked sustainability matters to executive pay. By contrast, sustainability governance in other jurisdictions is increasingly being embedded into board charters, with designated sustainability committees, CEO-level accountabilities, and sustainability KPIs tied to remuneration.

The Reuters report further illustrates how boards are responding to the current political landscape. In response to increasing scrutiny and political pushback, many U.S. companies are becoming more cautious in how they communicate their sustainability efforts. Rather than abandoning these initiatives, firms are shifting away from the term “ESG” in favour of alternatives like “sustainability” or “responsible growth,” suggesting a strategic reframing rather than a retreat.

Ford’s Integrated Reporting Manager Katy Hoellerbauer said that “we have a very experienced senior team who have seen all types of political winds of change and who remain very focused on what is our purpose. We think in terms that are longer than any political cycle. In an environment where there’s so much upheaval and even chaos, the company can remain steady by taking the long view of what are our goals.”

Lessons for New Zealand directors

• Voluntary isn’t synonymous with vague: U.S. companies show that even without prescriptive rules, strong market signals can drive disclosure discipline
• Materiality is strategic: double materiality aligns sustainability with long-term value and risk oversight
• Assurance builds trust: investors, stakeholders and even regulators are demanding credible, comparable data
• Leadership matters: sustainability governance must evolve, and risks must be surfaced and governed

The challenge for New Zealand boards is to move from passive oversight to active stewardship – where directors drive sustainability integration into culture, risk and strategy. Directors need to lead and act on climate and nature. But that leadership will come not from regulation alone, but from governance that is engaged, informed and future focused. Let’s not wait until our disclosures are deemed insufficient or outdated. The world is watching and it’s moving faster than we are.

 

*AI assisted