Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Government Bill As reported from the committee of the whole House 30—3 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Key to symbols used in reprinted bill As reported from the committee of the whole House text inserted text deleted Hon Dr David Clark Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Government Bill Contents Page 1 Title 5 2 Commencement 5 Part 1 Amendments to Financial Markets Conduct Act 2013 to come into force by first anniversary of Royal assent 3 Principal Act 6 4 Section 5 amended (Overview) 6 5 Section 6 amended (Interpretation) 6 6 Section 351 amended (Regulations modifying this Part or Part 7 7 for licensed markets) 6A Section 461C amended (Failure to comply with authoritative 7 notice does not give rise to pecuniary penalty) 7 New Part 7A inserted 7 Part 7A Climate-related disclosures for certain FMC reporting entities with higher level of public accountability Subpart 1—Overview, application, and interpretation 461N Overview 8 461O Meaning of climate reporting entity 8 461OA Definitions relating to listed issuers 9 461P Meaning of large (in relation to registered banks, licensed 10 insurers, credit unions, and building societies) 461PA Meaning of large after amalgamation 11 461Q Meaning of large manager 11 30—3 1 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill 461QA Application if person’s status changes during accounting 13 period 461R Miscellaneous provision relating to application 13 Subpart 2—CRD records 461S Climate reporting entities must keep proper CRD records 14 461T Manner in which CRD records to be kept 14 461U Period for which CRD records to be kept 14 461V Inspection of CRD records 14 Subpart 3—Preparation of climate statements Climate statements of climate reporting entities 461W Climate statements must be prepared 15 461X Group climate statements must be prepared 15 461Y Climate statements for overseas climate reporting entities 16 Climate statements relating to registered schemes 461Z Climate statements for separate funds of registered 16 schemes, etc 461ZA Application if manager of registered scheme changes and 17 new manager is not large manager Miscellaneous 461ZB Climate statements may be combined in single document 17 461ZBA Failure to comply with authoritative notice does not give 17 rise to pecuniary penalty Offences 461ZC Offence to knowingly fail to comply with climate 18 standards Subpart 4—Assurance engagements 461ZD No requirement for assurance of climate statements on 18 commencement of Part Subpart 5—Lodgement of climate statements 461ZN Lodgement of climate statements 18 461ZO Information about climate statements of climate reporting 19 entities to be made available in annual report Subpart 7—Civil liability for certain contraventions of this Part 461ZS Part 7A climate-related disclosure provisions 19 8 Section 462 amended (When FMA may make stop orders) 20 9 Section 468 amended (When FMA may make direction orders) 20 10 Section 470 amended (FMA may order that simplified disclosure 20 PDS may not be used) 2 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill 11 Section 474 amended (FMA may order that exclusion for offers of 20 products of same class as quoted products does not apply) 12 Section 485 amended (What are civil liability provisions) 20 12A Section 489 amended (When court may make pecuniary penalty 20 orders) 13 Section 490 amended (Maximum amount of pecuniary penalty) 20 14 Section 501 amended (Additional disclosure or financial reporting 21 defence for directors who are treated as contravening) 15 Section 534 amended (Directors treated as having contravened in 21 case of defective disclosure or financial reporting contravention) 17 Section 554 amended (Regulations or exemptions may require 21 compliance with generally accepted accounting practice, standards, or FMA frameworks or methodologies) 18 Section 556 amended (FMA may grant exemptions) 21 19 Section 561A amended (Financial reporting exemptions) 22 20 Schedule 4 amended 22 Part 1A Amendments to Financial Markets Conduct Act 2013 to come into force by third anniversary of Royal assent 20A Section 6 amended (Interpretation) 22 20B Section 461N amended (Overview) 22 20C Section 461S amended (Climate reporting entities must keep 22 proper CRD records) 20D Section 461ZD replaced (No requirement for assurance of 23 climate statements on commencement of Part) 461ZD Assurance engagement required for parts of climate 23 statements relating to greenhouse gas emissions 461ZDA Assurance engagement must be carried out in accordance 24 with auditing and assurance standards 461ZDB Assurance practitioner’s report 24 461ZDC Assurance engagement may cover other parts of climate 24 statements Assurance practitioner access to information 461ZDD Climate reporting entity must give assurance practitioner 24 access to information 461ZDE Assurance practitioner may require information and 25 explanations from director or employee 20E Section 461ZN amended (Lodgement of climate statements) 25 20F Section 461ZO amended (Information about climate statements 26 of climate reporting entities to be made available in annual report) 20G Section 461ZS amended (Part 7A climate-related disclosure 26 provisions) 3 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill 20H Section 501 amended (Additional disclosure or financial reporting 26 defence for directors who are treated as contravening) 20I Section 534 amended (Directors treated as having contravened in 26 case of defective disclosure or financial reporting contravention, financial reporting contravention, or climate-related disclosure contravention) 20J Schedule 4 amended 26 Part 2 Amendments to Financial Reporting Act 2013 21 Principal Act 27 22 Section 3 amended (Purpose) 27 23 Section 4 amended (Overview of financial reporting duties) 27 24 Section 5 amended (Interpretation) 27 24A New section 9AA inserted (Meaning of climate-related disclosure 28 framework) 9AA Meaning of climate-related disclosure framework 28 25 Section 12 amended (Functions of Board) 29 26 Section 14 amended (Membership of Board) 29 27 Subpart 2 heading in Part 2 replaced 29 Subpart 2—Standards 28 New sections 19A to 19C and cross-heading inserted 29 19A Guidance for purposes of non-financial reporting 29 Climate standards 19B Purpose of climate standards and climate-related 30 disclosures 19C Climate standards 30 29 Section 27 amended (When standards and authoritative notices 30 take effect) 30 Section 44 amended (Purpose) 30 31 New subpart 6 heading in Part 2 inserted 30 Subpart 6—Monetary amounts adjusted for inflation 32 Section 48 amended (Minister must regularly review amounts to 30 take into account inflation) 33 Section 49 amended (Order may amend amounts) 31 34 Section 51 amended (Levies) 31 35 Schedule amended 31 Part 1 Provisions relating to Financial Reporting Amendment Act 2014 4 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill cl 2 Part 3 Amendments to other Acts Subpart 1—Public Audit Act 2001 36 Principal Act 31 37 Section 4 amended (Interpretation) 31 38 New section 15B inserted (CRD assurance practitioner for public 31 entities) 15B CRD assurance practitioner for public entities 32 39 New section 34A inserted (Appointment of CRD assurance 32 practitioners) 34A Appointment of CRD assurance practitioners 32 40 Section 35 amended (Delegation of powers) 32 41 Section 41 amended (Protection from liability) 32 42 Section 42 amended (Audit fees) 32 Subpart 2—Related and consequential amendments 43 Related and consequential amendments 33 Schedule 1 34 New Part 7 inserted into Schedule 4 of Financial Markets Conduct Act 2013 Schedule 1A 36 New Part 8 inserted into Schedule 4 of Financial Markets Conduct Act 2013 Schedule 2 37 New Part 2 inserted into Schedule of Financial Reporting Act 2013 Schedule 3 39 Related and consequential amendments The Parliament of New Zealand enacts as follows: 1 Title This Act is the Financial Sector (Climate-related Disclosures and Other Mat‐ ters) Amendment Act 2021. 2 Commencement 5 (1) The following parts of this Act come into force on the day after Royal assent: (a) Part 2, other than sections 32(1) and 33: (b) section 43(1). (2) The rest of this Act comes into force on a date or dates set by Order in Council. (3) However,— 10 5 Financial Sector (Climate-related Disclosures and Other Part 1 cl 3 Matters) Amendment Bill (a) any part of this Act, other than Part 1A and subpart 1 of Part 3, that has not come into force by the first anniversary of Royal assent comes into force then: (b) any part of Part 1A and subpart 1 of Part 3 that has not come into force by the third anniversary of Royal assent comes into force then. 5 (4) An Order in Council made under this section is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements). Part 1 Amendments to Financial Markets Conduct Act 2013 to come into force by first anniversary of Royal assent 10 3 Principal Act This Part amends the Financial Markets Conduct Act 2013. 4 Section 5 amended (Overview) After section 5(1)(g), insert: (ga) Part 7A provides for climate-related disclosure obligations: 15 5 Section 6 amended (Interpretation) (1) In section 6(1), insert in their appropriate alphabetical order: applicable climate standard has the same meaning as in section 5(1) of the Financial Reporting Act 2013 authoritative notice has the same meaning as in section 5(1) of the Financial 20 Reporting Act 2013 climate-related disclosure framework has the same meaning as in section 9AA of the Financial Reporting Act 2013 climate reporting entity has the meaning set out in section 461O climate statements has the same meaning as in section 5(1) of the Financial 25 Reporting Act 2013 CRD records means the records that a climate reporting entity is required to keep by subpart 2 of Part 7A group climate statements has the same meaning as in section 5(1) of the Financial Reporting Act 2013 30 overseas climate reporting entity, in Part 7A, means a body corporate that— (a) is incorporated outside New Zealand; and (b) is a climate reporting entity under section 461O(1)(b) to (e) (see sec- tion 461P(3) and (4)) Part 7A climate-related disclosure provision means any of the provisions 35 specified in section 461ZS(3) or (4) 6 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 1 cl 7 separate fund, in Parts 7 and 7A, has the meaning set out in section 461A(2) (2) In section 6(1), replace the definition of group with: group,— (a) in Part 7 and subpart 1 of Part 7A, means a group comprising an FMC reporting entity and its subsidiaries: 5 (b) in Part 7A (other than subpart 1), means a group comprising a climate reporting entity and its subsidiaries (2A) In section 6(1), definition of licensed insurer, paragraph (b), replace “section 238(1)(b) of that Act” with “section 238(1)(b)(i)(A) or (ii) of that Act; and”. (2B) In section 6(1), definition of licensed insurer, after paragraph (b), insert: 10 (c) in Part 7A, does not include a Lloyd’s underwriter (within the meaning of that Act) or an insurer that is included in a class of insurers that is the subject of an exemption under section 238(1)(b) of that Act (3) In section 6(1), definition of subsidiary, replace “Part 7” with “Parts 7 and 7A”. 15 6 Section 351 amended (Regulations modifying this Part or Part 7 for licensed markets) (1) In the heading to section 351, after “7”, insert “or 7A”. (2) Replace section 351(1)(ab) with: (ab) providing that section 451(1)(d) does not apply in respect of persons that 20 are listed issuers only in respect of a licensed market or class of licensed markets, and providing for replacement or modified requirements to apply relating to— (i) accounting records and financial reporting: (ii) CRD records and climate-related disclosures (for those listed issu‐ 25 ers that would otherwise be climate reporting entities under sec- tion 461O(1)(a)): 6A Section 461C amended (Failure to comply with authoritative notice does not give rise to pecuniary penalty) Repeal section 461C(3). 30 7 New Part 7A inserted After Part 7, insert: 7 Financial Sector (Climate-related Disclosures and Other Part 1 cl 7 Matters) Amendment Bill Part 7A Climate-related disclosures for certain FMC reporting entities with higher level of public accountability Subpart 1—Overview, application, and interpretation 461N Overview 5 (1) This Part provides for climate reporting entities to— (a) keep proper records relating to their obligations to make climate-related disclosures; and (b) prepare climate statements; and (d) lodge those statements. 10 (3) This section is only a guide to the general scheme and effect of this Part. 461O Meaning of climate reporting entity (1) In this Act, a person who is an FMC reporting entity that, under section 461K, is considered to have a higher level of public accountability than other FMC reporting entities is a climate reporting entity if that person is 1 or more of the 15 following: (a) a listed issuer that— (i) is a large listed issuer; and (ii) is not an excluded listed issuer: (b) a registered bank that is large: 20 (c) a licensed insurer that is large: (d) a credit union that is large: (e) a building society that is large. (2) In this Act, a manager of a registered scheme (other than a restricted scheme) is a climate reporting entity in respect of the scheme if— 25 (a) the manager is a large manager; and (b) section 461K(1)(b) applies to the manager in respect of the scheme. (3) In this section,— excluded listed issuer has the meaning set out in section 461OA large, in relation to a registered bank, licensed insurer, credit union, or building 30 society, has the meaning set out in section 461P large listed issuer has the meaning set out in section 461OA large manager has the meaning set out in section 461Q. 8 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 1 cl 7 461OA Definitions relating to listed issuers (1) For the purposes of this Part, a listed issuer is a large listed issuer in respect of an accounting period if either or both of the following apply at least 1 of the following applies to the listed issuer: (a) as at the balance date of each of the 2 preceding accounting periods, the 5 issuer’s market capitalisation exceeds $60 million: (a) the listed issuer,— (i) at any time in the accounting period, has quoted equity securities; and (ii) as at the balance date of each of the 2 preceding accounting 10 periods, has equity securities (whether quoted or unquoted) that have a total value, as implied by the market price or fair value of those equity securities, that exceeds $60 million: (aa) the listed issuer,— (i) at any time in the accounting period, has quoted debt securities; 15 and (ii) at any time in the 2 preceding accounting periods, has quoted debt securities with a total face value that exceeds $60 million: (b) the listed issuer is large after amalgamation (within the meaning of sec- tion 461PA) in respect of the accounting period. 20 (2) For the purposes of this Part, a listed issuer is an excluded listed issuer in respect of an accounting period if, at all times during the accounting period,— (a) the issuer has no equity securities, and no debt securities, that are quo‐ ted; or (b) any equity securities of the issuer and any debt securities of the issuer 25 that are quoted are quoted only on a growth market. (a) any equity securities of the issuer and any debt securities of the issuer that are quoted are quoted only on a growth market; or (b) the issuer has no quoted equity securities and no quoted debt securities. (3) And see section 351(1)(ab) (which may allow for some listed issuers not to 30 be FMC reporting entities and, consequentially, not climate reporting entities under section 461O(1)(a)). (3A) For the purposes of subsection (1)(a)(ii), fair value must be determined in accordance with generally accepted accounting practice. (4) In this section, growth market means a financial product market if— 35 (a) the operator has a licence to operate the market issued under section 316; and (b) either or both of the following apply: 9 Financial Sector (Climate-related Disclosures and Other Part 1 cl 7 Matters) Amendment Bill (i) the licence is subject to a condition that limits the size of issuers that are eligible to become, or to remain, listed issuers on the financial product market (for example, a limit based on the issu‐ er’s market capitalisation): (ii) the market is otherwise designed for, and clearly targeted at, 5 small- and medium-sized entities. market capitalisation, in relation to— (a) a listed issuer of quoted equity securities, means the value of all of the issuer’s equity securities, as implied by the market price or fair value of those equity securities: 10 (b) a listed issuer to which paragraph (a) does not apply and that has issued quoted debt securities, means the net assets of the issuer and its subsidiaries (if any) as reported in the most recent financial statements or group financial statements prepared in accordance with generally accepted accounting practice for the issuer and those subsidiaries. 15 461P Meaning of large (in relation to registered banks, licensed insurers, credit unions, and building societies) (1) For the purposes of this Part, a registered bank, credit union, or building soci‐ ety (A) is large in respect of an accounting period if either or both of the fol‐ lowing apply: 20 (a) as at the balance date of each of the 2 preceding accounting periods, the total assets of A and A’s subsidiaries (if any) exceed $1 billion: (b) A is large after amalgamation (within the meaning of section 461PA) in respect of the accounting period. (2) For the purposes of this Part, a licensed insurer is large in respect of an 25 accounting period if at least 1 of the following paragraphs applies to the licensed insurer: (a) as at the balance date of each of the 2 preceding accounting periods, the total assets of the licensed insurer and its subsidiaries (if any) exceed $1 billion: 30 (b) in each of the 2 preceding accounting periods, the annual gross premium revenue of the licensed insurer and its subsidiaries (if any) exceeds $250 million: (c) the licensed insurer is large after amalgamation (within the meaning of section 461PA) in respect of the accounting period. 35 (3) However, if a registered bank, credit union, building society, or licensed insurer is an overseas company,— (a) subsections (1) and (2) do not apply; and 10 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 1 cl 7 (b) the overseas company is large for the purposes of section 461O(1)(b) to (e) if its New Zealand business, or its group’s New Zealand business, is large under subsection (4). (4) The New Zealand business of an overseas company or its group is large in respect of an accounting period if at least 1 of the following paragraphs applies 5 (calculated as if the New Zealand business were an entity): (a) as at the balance date of each of the 2 preceding accounting periods, the total assets of the New Zealand business exceed $1 billion: (b) the overseas company is a licensed insurer and, in each of the 2 preced‐ ing accounting periods, the annual gross premium revenue of the New 10 Zealand business exceeds $250 million. (4A) A financial reporting standard (or a part of a standard) issued by the External Reporting Board that is expressed as applying for the purposes of subsection (4) must be applied in determining whether that provision applies. (5) In this section, overseas company means a body corporate that is incorporated 15 outside New Zealand. 461PA Meaning of large after amalgamation (1) For the purposes of this Part, a person (A) is large after amalgamation in respect of an accounting period if— (a) A amalgamated with a large entity during the accounting period; or 20 (b) A is a new entity formed on the amalgamation of 2 or more entities dur‐ ing the accounting period, and at least 1 of those entities was a large entity. (2) If A is large after amalgamation under subsection (1) in respect of an accounting period, A continues to be large after amalgamation in respect of 25 the next accounting period. (3) In this section, large entity means an entity that, in respect of the accounting period, was any of— (a) a large listed issuer under section 461OA(1) (other than an issuer described in section 461OA(2)(a) or (b) for the accounting period up 30 to the time of amalgamation): (b) a registered bank, licensed insurer, credit union, or building society that is large under section 461P. 461Q Meaning of large manager (1) For the purposes of this Part, a manager (A) that holds a market services 35 licence that covers the service referred to in section 388(a) is a large manager in respect of an accounting period of A if, as at the balance date of each of A’s 2 preceding accounting periods, the total assets of the following schemes exceed $1 billion: 11 Financial Sector (Climate-related Disclosures and Other Part 1 cl 7 Matters) Amendment Bill (a) all schemes for which A is manager; and (b) all schemes for which the manager is an authorised body that provides the service of acting as a manager of a registered scheme under A’s mar‐ ket services licence. (2) If A is a large manager, every manager described in subsection (1)(b) is also 5 a large manager. Example Company A holds a licence that covers acting as a manager of registered schemes. A’s subsidiaries, B and C, also provide this service under A’s licence (as authorised bodies). 10 The assets of the schemes for which A is manager total $700 million on the bal- ance date of each of A’s 2 preceding accounting periods (the relevant balance dates). The assets of the schemes managed by B total a further $300 million, and the assets of the schemes managed by C total $200 million, on each of the relevant 15 balance dates. The total assets therefore exceed $1 billion. A is a large manager. B and C are also large managers. (3) Subsections (4) and (5) apply if— (a) a manager and a scheme managed by the manager have different balance 20 dates; and (b) the manager becomes, or ceases to be, a large manager. (4) If the manager was not a large manager in respect of an accounting period (AP1) but becomes a large manager in respect of the next accounting period (AP2), the manager— 25 (a) is not treated as a large manager in respect of the scheme in relation to the accounting period of the scheme that starts in AP1 and ends in AP2 unless paragraph (b) applies: (b) must be treated as a large manager in respect of the scheme in relation to the accounting period of the scheme that starts in AP1 and ends in AP2 30 if— (i) the manager was not the manager of the scheme at the start of that accounting period of the scheme; and (ii) the manager at the start of that accounting period of the scheme was a climate reporting entity in respect of the scheme. 35 (5) If the manager was a large manager in respect of an accounting period (AP3) but ceases to be a large manager in the next accounting period (AP4), the man‐ ager must be treated as a large manager in respect of the scheme in relation to the accounting period of the scheme that starts in AP3 and ends in AP4. (6) In this section, the total assets of a scheme are— 40 12 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 1 cl 7 (a) as reported in the most recent audited financial statements, prepared in accordance with generally accepted accounting practice, for the scheme; or (b) if there are no such statements, as calculated— (i) for a date as near as possible to the balance date of the manager; 5 and (ii) as if for the purpose of preparing financial statements for the scheme in accordance with generally accepted accounting prac‐ tice. (7) In this section, scheme means a registered scheme (other than a restricted 10 scheme). 461QA Application if person’s status changes during accounting period (1) If a person ceases to be a climate reporting entity during an accounting period, that person is treated as continuing to be a climate reporting entity in relation to that accounting period for the purposes of this Act and every other enactment. 15 (2) However, subsection (3) applies if the person (A)— (a) ceased to be a climate reporting entity under section 461O(1); and (b) on the balance date, is not a climate reporting entity under section 461O(1) (disregarding the rule in subsection (1)). (3) If this subsection applies,— 20 (a) A is not required to ensure the completion of climate statements or group climate statements under any of sections 461W to 461Y and the lodgement of those climate statements in relation to the accounting period: (b) records required to be kept by A up to the date that A ceased to be a cli‐ 25 mate reporting entity under section 461O(1) are CRD records for the purposes of sections 461T to 461V. (4) In any case where a person is, or was, the manager of a registered scheme (and a climate reporting entity under section 461O(2) in respect of the scheme), subsection (1) does not limit— 30 (a) section 461Q(5) (which applies if the manager and the scheme have different balance dates); or (b) section 461ZA (which may apply if the manager of a scheme changes during an accounting period). 461R Miscellaneous provision relating to application 35 2 Nothing in this Part requires a climate reporting entity to ensure the completion of climate statements or group climate statements and the lodgement of those climate statements in relation to an accounting period that ended before the accounting period in which that person became a climate reporting entity. 13 Financial Sector (Climate-related Disclosures and Other Part 1 cl 7 Matters) Amendment Bill Subpart 2—CRD records 461S Climate reporting entities must keep proper CRD records (1) Every climate reporting entity under section 461O(1) must ensure that there are kept at all times records that will enable the climate reporting entity to ensure that the climate statements of the climate reporting entity comply with 5 the climate-related disclosure framework. (2) Every manager that is a climate reporting entity in respect of a registered scheme must ensure that there are kept at all times records that will enable the manager to ensure that the climate statements relating to the registered scheme comply with the climate-related disclosure framework. 10 (4) Every climate reporting entity must establish and maintain a satisfactory sys‐ tem of control of the records that it is required to keep under this section. (5) In this section,— climate statements of the climate reporting entity means the climate state‐ ments or group climate statements that are required to be prepared under any of 15 sections 461W to 461Y climate statements relating to the registered scheme means the climate state‐ ments of the separate funds of the scheme or the climate statements of the scheme that are required to be prepared under section 461Z. 461T Manner in which CRD records to be kept 20 (1) Every climate reporting entity must keep the CRD records in the prescribed manner (if any). (2) A climate reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000. (3) The offence in this section is an infringement offence (see subpart 5 of Part 8). 25 461U Period for which CRD records to be kept CRD records, or copies of them, must be retained by the climate reporting entity for a period of at least 7 years after the date the records are made. 461V Inspection of CRD records (1) Every climate reporting entity must make the CRD records available, in the 30 prescribed manner at all reasonable times for inspection without charge, to— (a) the directors of the climate reporting entity; and (b) any supervisor (if the climate reporting entity is an issuer of debt secur‐ ities or the manager of a registered scheme); and (c) the FMA; and 35 (d) any other persons authorised or permitted by an enactment to inspect the CRD records of the climate reporting entity or scheme. 14 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 1 cl 7 (2) A climate reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000. (3) The offence in this section is an infringement offence (see subpart 5 of Part 8). Subpart 3—Preparation of climate statements Climate statements of climate reporting entities 5 461W Climate statements must be prepared (1) Every climate reporting entity must ensure that, within 4 months after the bal‐ ance date of the entity, climate statements that comply with the climate-related disclosure framework are— (a) completed in relation to the entity and that balance date; and 10 (b) dated and signed on behalf of the entity by 2 directors of the entity or, if the entity has only 1 director, by that director. (2) However, subsection (1) does not apply to— (a) a climate reporting entity that, on the balance date referred to in sub- section (1), has 1 or more subsidiaries; or 15 (b) an overseas climate reporting entity, unless it is a climate reporting entity under section 461O(1)(a); or (c) a person that is a climate reporting entity only under section 461O(2). Example A company (incorporated in New Zealand and with no subsidiaries) is a large man- 20 ager of 2 registered schemes. The company is also a large registered bank, so subsection (2)(c) does not apply. Subsection (1) applies to the company (and see section 461Z, which also applies to the company in respect of its registered schemes). 461X Group climate statements must be prepared 25 (1) Subsection (2) applies to every climate reporting entity in relation to a bal‐ ance date of the entity if the entity has, on that balance date, 1 or more subsid‐ iaries. (2) The climate reporting entity must ensure that, within 4 months after that bal‐ ance date, group climate statements that comply with the climate-related dis‐ 30 closure framework are— (a) completed in relation to the group and that balance date; and (b) dated and signed on behalf of the entity by 2 directors of the entity or, if the entity has only 1 director, by that director. (3) However, subsection (2) does not apply to— 35 (a) an overseas climate reporting entity, unless it is a climate reporting entity under section 461O(1)(a); or 15 Financial Sector (Climate-related Disclosures and Other Part 1 cl 7 Matters) Amendment Bill (b) a person that is a climate reporting entity only under section 461O(2). 461Y Climate statements for overseas climate reporting entities (1) This section applies to every overseas climate reporting entity, unless it is a cli‐ mate reporting entity under section 461O(1)(a). (2) The climate reporting entity must ensure that, within 4 months after the balance 5 date of the entity, climate statements that comply with the climate-related dis‐ closure framework are— (a) prepared for its New Zealand business as if that business were conducted by a company formed and registered in New Zealand; and (b) dated and signed on behalf of the entity by 2 directors of the entity or, if 10 the entity has only 1 director, by that director. (3) However, if the climate reporting entity has, on that balance date, 1 or more subsidiaries, subsection (2) does not apply and instead the entity must ensure that, within 4 months after the balance date of the entity, climate statements that comply with the climate-related disclosure framework are— 15 (a) prepared for the group’s New Zealand business as if the members of the group were companies formed and registered in New Zealand; and (b) dated and signed on behalf of the entity by 2 directors of the entity or, if the entity has only 1 director, by that director. (4) Subsection (3) does not limit any obligation under this subpart of a subsid‐ 20 iary of the climate reporting entity. Climate statements relating to registered schemes 461Z Climate statements for separate funds of registered schemes, etc (1) This section applies to every manager of a registered scheme that is a climate reporting entity in respect of the scheme. 25 (2) The manager must ensure that, within 4 months after the balance date of the scheme, climate statements that comply with the climate-related disclosure framework are— (a) completed in relation to each separate fund of the scheme and that bal‐ ance date; and 30 (b) if any liabilities of the manager and the scheme are not limited to a sep‐ arate fund, completed in relation to the scheme and that balance date; and (c) dated and signed on behalf of the manager by 2 directors of the manager or, if the manager has only 1 director, by that director. 35 (3) However, if the manager was not the manager of the scheme at the start of the scheme’s accounting period, subsection (2) applies to the manager only if the 16 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 1 cl 7 manager of the scheme at the start of the scheme’s accounting period was a cli‐ mate reporting entity in respect of the scheme. 461ZA Application if manager of registered scheme changes and new manager is not large manager (1) This section applies if— 5 (a) the manager of a registered scheme changes during an accounting period of the scheme; and (b) the person who was the manager of the scheme at the start of the accounting period (the old manager) was a climate reporting entity in respect of the scheme; and 10 (c) the person who is the manager of the scheme at the end of the account‐ ing period (the new manager) is not a large manager (within the mean‐ ing of section 461Q). (2) If this section applies, the new manager is not required to ensure the comple‐ tion of climate statements under section 461Z(2) and the lodgement of those 15 climate statements in relation to the accounting period. (3) Records kept by the old manager up to the date that the old manager ceased to hold office as manager of the scheme are CRD records for the purposes of sec- tions 461T to 461V. Miscellaneous 20 461ZB Climate statements may be combined in single document Nothing in this Part prevents any of the following from being combined in a single document: (a) climate statements and group climate statements that are required to be prepared under any of sections 461W to 461Y in relation to an 25 accounting period and 1 or more members of a group: (b) climate statements that are required to be prepared under section 461Z in relation to an accounting period and a registered scheme. 461ZBA Failure to comply with authoritative notice does not give rise to pecuniary penalty 30 (1) This section applies if climate statements or group climate statements referred to in this subpart fail to comply with the climate-related disclosure framework as a result of a failure to comply with an authoritative notice. (2) A pecuniary penalty order may not be made under section 489 in relation to the failure to comply with the authoritative notice. 35 Compare: s 461C 17 Financial Sector (Climate-related Disclosures and Other Part 1 cl 7 Matters) Amendment Bill Offences 461ZC Offence to knowingly fail to comply with climate standards (1) A climate reporting entity and every director of the entity commit an offence if— (a) any of the following fail to comply with an applicable climate standard: 5 (i) the climate statements of the entity prepared under section 461W: (ii) group climate statements in relation to a group comprising the entity and its subsidiaries prepared under section 461X: (iii) the climate statements or group climate statements prepared by 10 the entity under section 461Y: (iv) in the case of a manager of a registered scheme, the climate state‐ ments for any separate fund or for the scheme prepared under section 461Z; and (b) the entity or the director (as the case may be) knows that the climate 15 statements or group climate statements fail to so comply when those statements are lodged. (2) A person who commits an offence under subsection (1) is liable on convic‐ tion,— (a) in the case of an individual, to imprisonment for a term not exceeding 20 5 years, a fine not exceeding $500,000, or both; and (b) in any other case, to a fine not exceeding $2.5 million. Compare: s 461I Subpart 4—Assurance engagements 461ZD No requirement for assurance of climate statements on commencement 25 of Part (1) A climate reporting entity is not required to obtain an assurance engagement in relation to the climate statements or group climate statements that are required to be prepared under any of sections 461W to 461Z. (2) See Part 1A of the Financial Sector (Climate-related Disclosures and Other 30 Matters) Amendment Act 2021, which sets out assurance requirements to apply from a later date. Subpart 5—Lodgement of climate statements 461ZN Lodgement of climate statements (1) Every climate reporting entity that is required to prepare climate statements or 35 group climate statements under any of sections 461W to 461Y must ensure 18 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 1 cl 7 that, within 4 months after the balance date of the entity, copies of those state‐ ments are delivered to the Registrar for lodgement. (2) Every manager that is a climate reporting entity in respect of a registered scheme must ensure that, within 4 months after the balance date of the scheme, copies of the climate statements that are required to be prepared under section 5 461Z are delivered to the Registrar for lodgement. (3) A climate reporting entity that contravenes this section commits an offence and is liable on conviction to a fine not exceeding $50,000. (4) The offence in this section is an infringement offence (see subpart 5 of Part 8). 461ZO Information about climate statements of climate reporting entities to be 10 made available in annual report (1AAA) This section applies to every climate reporting entity that is required to pre‐ pare— (a) climate statements or group climate statements under any of sections 461W to 461Y; and 15 (b) an annual report under the Companies Act 1993 or any other enactment. (1) The climate reporting entity must include, in its annual report for the period ending on the balance date,— (a) a statement that the entity is a climate reporting entity for the purposes of this Act; and 20 (b) a copy of the climate statements or group climate statements prepared by the entity under any of sections 461W to 461Y, or the address of (or a link to) the Internet site where a copy of those statements can be accessed. (3) A climate reporting entity that contravenes this section commits an offence and 25 is liable on conviction to a fine not exceeding $50,000. (4) The offence in this section is an infringement offence (see subpart 5 of Part 8). (5) In this section, annual report includes a concise annual report. Subpart 7—Civil liability for certain contraventions of this Part 461ZS Part 7A climate-related disclosure provisions 30 (1) All of the provisions specified in subsections (3) and (4) are Part 7A cli‐ mate-related disclosure provisions. (2) A contravention of any of the provisions listed in subsection (3) may give rise to civil liability (see subpart 3 of Part 8), including a pecuniary penalty not exceeding $1 million in the case of an individual or $5 million in any other 35 case. (3) For the purposes of subsection (2), the provisions are the following: 19 Financial Sector (Climate-related Disclosures and Other Part 1 cl 8 Matters) Amendment Bill (a) section 461S (climate reporting entities must keep proper CRD records): (b) sections 461W to 461Z (climate statements and group climate state‐ ments must be prepared): (d) section 461ZN (climate statements must be lodged). 5 (4) A contravention of section 461U (CRD records to be kept for 7 years) may give rise to civil liability (see subpart 3 of Part 8), including a pecuniary pen‐ alty not exceeding $200,000 in the case of an individual or $600,000 in any other case. 8 Section 462 amended (When FMA may make stop orders) 10 In section 462(1)(ga), after “7”, insert “or 7A”. 9 Section 468 amended (When FMA may make direction orders) After section 468(1)(f), insert: (fa) a Part 7A climate-related disclosure provision: 10 Section 470 amended (FMA may order that simplified disclosure PDS may 15 not be used) After section 470(1)(b), insert: (ba) any provision under Part 7A: 11 Section 474 amended (FMA may order that exclusion for offers of products of same class as quoted products does not apply) 20 After section 474(1)(b), insert: (ba) any provision under Part 7A: 12 Section 485 amended (What are civil liability provisions) After section 485(g), insert: (ga) a Part 7A climate-related disclosure provision: 25 12A Section 489 amended (When court may make pecuniary penalty orders) In section 489(3)(b), replace “or 461C” with “, 461C, or 461ZBA”. 13 Section 490 amended (Maximum amount of pecuniary penalty) After section 490(2)(f), insert: (fa) a Part 7A climate-related disclosure provision (other than section 30 461U): 20 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 1 cl 18 14 Section 501 amended (Additional disclosure or financial reporting defence for directors who are treated as contravening) (1) In the heading to section 501, after “reporting”, insert “or climate-related disclosure”. (2) In section 501(1)(a), replace “and 461H” with “461H, 461W to 461Z, and 5 461ZN”. 15 Section 534 amended (Directors treated as having contravened in case of defective disclosure or financial reporting contravention) (1) In the heading to section 534, replace “or financial reporting contravention” with “, financial reporting contravention, or climate-related disclosure 10 contravention”. (2) After section 534(1)(ca), insert: (cb) a climate reporting entity has contravened any of sections 461W to 461Z and 461ZN (climate-related disclosure obligations); or (3) In section 534(3),— 15 (a) after “FMC reporting entity,”, insert “climate reporting entity,”; and (b) after “(ca),”, insert “(cb),”. (4) In section 534(5), after “FMC reporting entity,”, insert “climate reporting entity,”. 17 Section 554 amended (Regulations or exemptions may require compliance 20 with generally accepted accounting practice, standards, or FMA frameworks or methodologies) (1AAA) In the heading to section 554, replace “or FMA frameworks or method‐ ologies” with “, frameworks, or FMA methodologies”. (1) After section 554(1)(b), insert: 25 (baaa) the climate-related disclosure framework, either generally or in speci‐ fied circumstances: (ba) a climate standard: (2) In section 554(2), after “a financial reporting standard,”, insert “the climate- related disclosure framework, a climate standard,”. 30 (3) In section 554(3), insert in its appropriate alphabetical order: climate standard has the same meaning as in section 5(1) of the Financial Reporting Act 2013 18 Section 556 amended (FMA may grant exemptions) In section 556(1)(a), replace “7” with “7A”. 35 21 Financial Sector (Climate-related Disclosures and Other Part 1 cl 19 Matters) Amendment Bill 19 Section 561A amended (Financial reporting exemptions) (1) Replace the heading to section 561A with “Financial reporting and climate- related disclosure exemptions”. (2) After section 561A(1), insert: (1A) An exemption granted under this subpart in relation to any provision of Part 5 7A may, if the FMA thinks fit, apply to an accounting period that commenced before the exemption is granted (including an accounting period that ended before the exemption is granted) if the exemption is granted before the climate statements or group climate statements for that period are required to be lodged under that Part. 10 (3) In section 561A(2), after “7”, insert “or 7A”. 20 Schedule 4 amended (1) In Schedule 4, clause 1(1), insert as the last paragraph: (g) Part 7 provides for transitional provisions relating to Part 1 of the Financial Sector (Climate-related Disclosures and Other Matters) 15 Amendment Act 2021. (2) In Schedule 4,— (a) insert the Part set out in Schedule 1 of this Act as the last Part; and (b) make all necessary consequential amendments. Part 1A 20 Amendments to Financial Markets Conduct Act 2013 to come into force by third anniversary of Royal assent 20A Section 6 amended (Interpretation) In section 6(1), insert in its appropriate alphabetical order: assurance practitioner, in Part 7A, means a person who is appointed to carry 25 out an assurance engagement under that Part 20B Section 461N amended (Overview) After section 461N(1)(b), insert: (ba) to the extent that those statements are required to disclose greenhouse gas emissions, obtain an assurance engagement in relation to those state‐ 30 ments; and 20C Section 461S amended (Climate reporting entities must keep proper CRD records) Replace section 461S(1) and (2) with: 22 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 1A cl 20D (1) Every climate reporting entity under section 461O(1) must ensure that there are kept at all times records that will enable— (a) the climate reporting entity to ensure that the climate statements of the climate reporting entity comply with the climate-related disclosure framework; and 5 (b) the assurance engagement required by section 461ZD to be readily and properly carried out. (2) Every manager that is a climate reporting entity in respect of a registered scheme must ensure that there are kept at all times records that will enable— (a) the manager to ensure that the climate statements relating to the regis‐ 10 tered scheme comply with the climate-related disclosure framework; and (b) the assurance engagement required by section 461ZD to be readily and properly carried out. 20D Section 461ZD replaced (No requirement for assurance of climate statements on commencement of Part) 15 Replace section 461ZD with: 461ZD Assurance engagement required for parts of climate statements relating to greenhouse gas emissions (1) Every climate reporting entity must ensure that the climate statements or group climate statements that are required to be prepared under any of sections 20 461W to 461Z are, to the extent that those statements are required to disclose greenhouse gas emissions, the subject of an assurance engagement. (2) None of the following persons may carry out the assurance engagement: (a) a director, an officer, or an employee of the climate reporting entity: (b) a person who is in partnership with, or in the employment of, a person 25 specified in paragraph (a): (c) a liquidator or a person who is a receiver in respect of the property of the climate reporting entity: (d) a person who, by virtue of paragraphs (a) to (c), may not carry out an assurance engagement under this Part for a related body corporate of the 30 climate reporting entity. (3) In the case of a climate reporting entity that is a public entity under the Public Audit Act 2001, the only person who may carry out the assurance engagement is the Auditor-General or any other person who may act as the CRD assurance practitioner under that Act in respect of the assurance engagement. 35 23 Financial Sector (Climate-related Disclosures and Other Part 1A cl 20D Matters) Amendment Bill 461ZDA Assurance engagement must be carried out in accordance with auditing and assurance standards An assurance practitioner must, in carrying out an assurance engagement under this Part, comply with all applicable auditing and assurance standards. 461ZDB Assurance practitioner’s report 5 (1) The assurance practitioner’s report on the climate statements or group climate statements prepared by an entity under any of sections 461W to 461Z must comply with the requirements of all applicable auditing and assurance stand‐ ards. (2) If the assurance practitioner’s report indicates that the requirements of this Part 10 have not been complied with, the assurance practitioner must, within 7 20 working days after signing the report, send a copy of the report, and a copy of the climate statements or group climate statements to which it relates, to— (a) the FMA; and (b) the External Reporting Board; and 15 (c) in the case of a climate reporting entity that is an issuer of debt securities or a manager of a registered scheme, the supervisor. (3) An assurance practitioner who contravenes subsection (1) or (2) commits an offence and is liable on conviction to a fine not exceeding $50,000. 461ZDC Assurance engagement may cover other parts of climate statements 20 (1) Section 461ZD does not prevent the assurance engagement from covering the whole, or other parts, of the climate statements or group climate statements. (2) If an assurance engagement does cover the whole, or other parts, of the state‐ ments,— (a) the assurance practitioner’s report must separately identify the matters 25 that are required to be the subject of the assurance engagement under section 461ZD; and (b) this subpart applies, with any necessary modifications, in relation to the whole of the assurance engagement. (3) In this section, other parts, in relation to climate statements or group climate 30 statements, means any part or parts of those statements that are not required by section 461ZD to be the subject of the assurance engagement. Assurance practitioner access to information 461ZDD Climate reporting entity must give assurance practitioner access to information 35 (1) Every climate reporting entity must ensure that an assurance practitioner appointed for an assurance engagement under this Part has access, at all times, to— 24 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 1A cl 20E (a) the CRD records of the climate reporting entity or scheme; and (b) any other documents of the climate reporting entity or scheme that are relevant to the assurance engagement. (2) If a climate reporting entity contravenes subsection (1), every director of the entity commits an offence and is liable on conviction to a fine not exceeding 5 $50,000. (3) In any proceeding against a director for a contravention of subsection (1), it is a defence if the director proves that— (a) the climate reporting entity took all reasonable steps to ensure that sub‐ section would be complied with; or 10 (b) the director took all reasonable steps to ensure that the climate reporting entity complied with that subsection; or (c) in the circumstances, the director could not reasonably have been expec‐ ted to take steps to ensure that the climate reporting entity complied with that subsection. 15 Compare: 2013 No 101 s 38 461ZDE Assurance practitioner may require information and explanations from director or employee (1) An assurance practitioner appointed for an assurance engagement under this Part is entitled to require from a director or an employee of the climate report‐ 20 ing entity the information and explanations that the assurance practitioner thinks necessary for the performance of their duties as assurance practitioner. (2) A director or an employee who fails to comply with a requirement to provide information or an explanation under subsection (1) commits an offence and is liable on conviction to a fine not exceeding $50,000. 25 (3) In any proceeding against an employee for failing to comply with a require‐ ment to provide information or an explanation under subsection (1), it is a defence if the employee proves that— (a) the employee did not have the information required in their possession or under their control; or 30 (b) by reason of the position occupied by the employee or the duties assigned to them, they were unable to give the explanations required. Compare: 2013 No 101 s 39 20E Section 461ZN amended (Lodgement of climate statements) Replace section 461ZN(1) and (2) with: 35 (1) Every climate reporting entity that is required to prepare climate statements or group climate statements under any of sections 461W to 461Y must ensure that, within 4 months after the balance date of the entity, copies of the follow‐ ing are delivered to the Registrar for lodgement: 25 Financial Sector (Climate-related Disclosures and Other Part 1A cl 20F Matters) Amendment Bill (a) the climate statements or group climate statements that are required to be prepared; and (b) the assurance practitioner’s report on those statements. (2) Every manager that is a climate reporting entity in respect of a registered scheme must ensure that, within 4 months after the balance date of the scheme, 5 copies of the following are delivered to the Registrar for lodgement: (a) the climate statements that are required to be prepared under section 461Z; and (b) the assurance practitioner’s report on those statements. 20F Section 461ZO amended (Information about climate statements of 10 climate reporting entities to be made available in annual report) Replace section 461ZO(1)(b) with: (b) either— (i) a copy of the climate statements or group climate statements pre‐ pared by the entity under any of sections 461W to 461Y, 15 together with a copy of the assurance practitioner’s report on those statements; or (ii) the address of (or a link to) the Internet site where a copy of those statements, together with the assurance practitioner’s report on those statements, can be accessed. 20 20G Section 461ZS amended (Part 7A climate-related disclosure provisions) After section 461ZS(3)(b), insert: (ba) section 461ZD (parts of climate statements must be subject to assur‐ ance engagement): 20H Section 501 amended (Additional disclosure or financial reporting defence 25 for directors who are treated as contravening) In section 501(1)(a), after “461Z,”, insert “461ZD,”. 20I Section 534 amended (Directors treated as having contravened in case of defective disclosure or financial reporting contravention, financial reporting contravention, or climate-related disclosure contravention) 30 In section 534(1)(cb), after “461Z”, insert “, 461ZD,”. 20J Schedule 4 amended (1) In Schedule 4, clause 1(1), insert as the last paragraph: (h) Part 8 provides for transitional provisions relating to Part 1A of the Financial Sector (Climate-related Disclosures and Other Matters) 35 Amendment Act 2021. 26 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 2 cl 24 (2) In Schedule 4, clause 1(1), in the last paragraph (as inserted by subsection (1)), make any necessary consequential amendment. (3) In Schedule 4,— (a) insert the Part set out in Schedule 1A of this Act as the last Part; and (b) make all necessary consequential amendments. 5 Part 2 Amendments to Financial Reporting Act 2013 21 Principal Act This Part amends the Financial Reporting Act 2013. 22 Section 3 amended (Purpose) 10 (1) In section 3(b), after “financial reporting standards”, insert “, climate stand‐ ards,”. (2) After section 3(c), insert: (d) provide for standard provisions relating to climate-related disclosure duties under the Financial Markets Conduct Act 2013. 15 23 Section 4 amended (Overview of financial reporting duties) (1) In the heading to section 4, after “reporting”, insert “and other”. (2) After section 4(2), insert: (2A) This Act also provides for various matters relating to climate-related disclosure duties under the Financial Markets Conduct Act 2013, including— 20 (a) defining key concepts (for example, climate-related disclosure frame‐ work, climate statements, and group climate statements); and (b) providing for the Board to prepare and issue climate standards. (3) In section 4(3), after “duties”, insert “, and of this Act in relation to climate- related disclosure duties”. 25 24 Section 5 amended (Interpretation) (1) In section 5(1), replace the definition of applicable auditing and assurance standard with: applicable auditing and assurance standard, in relation to an audit or an assurance engagement, means an auditing and assurance standard that applies 30 to the audit or the assurance engagement in accordance with the standard (2) In section 5(1), insert in their appropriate alphabetical order: applicable climate standard, in relation to a reporting entity and to an accounting period or an interim accounting period of a reporting entity, means 27 Financial Sector (Climate-related Disclosures and Other Part 2 cl 24A Matters) Amendment Bill a climate standard that applies to the reporting entity and to the accounting period or the interim accounting period in accordance with the climate standard climate-related disclosure framework has the meaning set out in section 9AA climate reporting entity has the same meaning as in section 461O of the 5 Financial Markets Conduct Act 2013 climate standard means a climate standard issued by the Board under section 12; and includes an amendment to a climate standard that is issued by the Board climate statements, in relation to a reporting entity and a balance date, means 10 the climate-related disclosures for the entity as at the balance date, or in rela‐ tion to the accounting period ending at the balance date, that are required to be prepared in respect of the entity by an applicable climate standard group climate statements, in relation to a group and a balance date, means the climate-related disclosures for the group as at the balance date, or in relation to 15 the accounting period ending at the balance date, that are required to be pre‐ pared in respect of the group by an applicable climate standard (3) In section 5(1), replace the definition of reporting entity with: reporting entity— (a) means an entity whose financial statements, group financial statements, 20 reports, or other information is required by any enactment to comply, or be prepared in accordance, with generally accepted accounting practice or non-GAAP standards; or (b) means an entity whose climate statements, group climate statements, reports, or other information is required by any enactment to comply, or 25 be prepared in accordance, with the climate-related disclosure frame‐ work (4) In section 5(1), definition of standard, after paragraph (a), insert: (aa) a climate standard; or 24A New section 9AA inserted (Meaning of climate-related disclosure 30 framework) After section 9, insert: 9AA Meaning of climate-related disclosure framework In this Act, climate statements, group climate statements, a report, or other information complies with the climate-related disclosure framework only if 35 the statements, report, or other information complies with— (a) applicable climate standards; and (b) in relation to matters for which no provision is made in applicable cli‐ mate standards, an authoritative notice. 28 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 2 cl 28 25 Section 12 amended (Functions of Board) (1) After section 12(a), insert: (aa) to prepare and, if it thinks fit, issue climate standards for the purposes of any enactment that requires climate statements or group climate state‐ ments, or a statement, report, or other information to comply, or be pre‐ 5 pared in accordance, with the climate-related disclosure framework: (2) Replace section 12(c) with: (c) to prepare and, if it thinks fit, issue authoritative notices for the purposes of— (i) the definition of generally accepted accounting practice; or 10 (ii) the definition of climate-related disclosure framework: 26 Section 14 amended (Membership of Board) In section 14(2), replace “or law” with “law, or sustainable development”. 27 Subpart 2 heading in Part 2 replaced In Part 2, replace the subpart 2 heading with: 15 Subpart 2—Standards 28 New sections 19A to 19C and cross-heading inserted After section 19, insert: 19A Guidance for purposes of non-financial reporting (1) The Board may issue non-binding guidance that relates to non-financial report‐ 20 ing on 1 or more of the matters in section 17(2)(a)(i) to (iv). (2) The purpose of the guidance is to facilitate best practice reporting on those matters. (3) The guidance— (a) must not be inconsistent with any financial reporting standard or authori‐ 25 tative notice; and (b) must state that it is non-binding. (4) Subsection (1)— (a) applies regardless of whether an Order in Council is made under section 17(2): 30 (b) does not limit the general powers of the Board. 29 Financial Sector (Climate-related Disclosures and Other Part 2 cl 29 Matters) Amendment Bill Climate standards 19B Purpose of climate standards and climate-related disclosures The purpose of climate standards is to provide for, or promote, climate-related disclosures, in order to— (a) encourage entities to routinely consider the short-, medium-, and long- 5 term risks and opportunities that climate change presents for the activ‐ ities of the entity or the entity’s group; and (b) enable entities to show how they are considering those risks and oppor‐ tunities; and (c) enable investors and other stakeholders to assess the merits of how 10 entities are considering those risks and opportunities. 19C Climate standards (1) Climate standards may— (a) have general or specific application: (b) differ according to differences in time or circumstance. 15 (2) A climate standard may be expressed to apply to all reporting entities or groups or to specified classes of reporting entities or groups. (3) A climate standard may specify the accounting periods or interim accounting periods in relation to which the standard applies. 29 Section 27 amended (When standards and authoritative notices take 20 effect) In section 27(2)(a), replace “accounting,” with “climate-related,”. 30 Section 44 amended (Purpose) Repeal section 44(b). 31 New subpart 6 heading in Part 2 inserted 25 In Part 2, after section 47, insert: Subpart 6—Monetary amounts adjusted for inflation 32 Section 48 amended (Minister must regularly review amounts to take into account inflation) (1) In section 48(1)(a), replace “and section 64(2) of the Friendly Societies and 30 Credit Unions Act 1982” with “section 64(2) of the Friendly Societies and Credit Unions Act 1982, and sections 461P and 461Q of the Financial Mar‐ kets Conduct Act 2013”. (2) In section 48(3), replace “8” with “6”. 30 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 3 cl 38 33 Section 49 amended (Order may amend amounts) After section 49(h), insert: (i) amending the amounts specified in sections 461P and 461Q of the Financial Markets Conduct Act 2013: (j) amending the amounts in the example in section 461Q of the Financial 5 Markets Conduct Act 2013. 34 Section 51 amended (Levies) After section 51(3)(f), insert: (fa) climate reporting entities; and 35 Schedule amended 10 (1) In the Schedule, replace the cross-heading above clause 1 with: Part 1 Provisions relating to Financial Reporting Amendment Act 2014 (2) In the Schedule,— (a) insert the Part set out in Schedule 2 of this Act as the last Part; and 15 (b) make all necessary consequential amendments. Part 3 Amendments to other Acts Subpart 1—Public Audit Act 2001 36 Principal Act 20 This subpart amends the Public Audit Act 2001. 37 Section 4 amended (Interpretation) (1) In section 4, insert in their appropriate alphabetical order: appointed CRD assurance practitioner means a person appointed under sec- tion 34A to carry out 1 or more assurance engagements under section 15B 25 climate reporting entity has the same meaning as in section 461O of the Financial Markets Conduct Act 2013 (2) In section 4, definition of Auditor-General, after “appointed auditor”, insert “or appointed CRD assurance practitioner”. 38 New section 15B inserted (CRD assurance practitioner for public entities) 30 After section 15A, insert: 31 Financial Sector (Climate-related Disclosures and Other Part 3 cl 39 Matters) Amendment Bill 15B CRD assurance practitioner for public entities (1) The Auditor-General is, and must from time to time act as, the CRD assurance practitioner for an assurance engagement required for the purposes of Part 7A of the Financial Markets Conduct Act 2013 by a climate reporting entity that is a public entity. 5 (2) In carrying out an assurance engagement under subsection (1), the Auditor- General must (at a minimum) comply with the auditing and assurance stand‐ ards that apply to the assurance engagement. 39 New section 34A inserted (Appointment of CRD assurance practitioners) After section 34, insert: 10 34A Appointment of CRD assurance practitioners (1) The Auditor-General may from time to time appoint any of the following to act as a CRD assurance practitioner and to carry out, under section 15B, 1 or more assurance engagements required for the purposes of Part 7A of the Financial Markets Conduct Act 2013 by a climate reporting entity that is a pub‐ 15 lic entity, on the Auditor-General’s behalf: (a) an employee of the Auditor-General: (b) a person who, under section 461ZD(2) of the Financial Markets Con‐ duct Act 2013, may carry out the assurance engagement. (3) An appointment must be in writing and may be made subject to any restrictions 20 and conditions that the Auditor-General thinks fit. (4) The Auditor-General may authorise an appointed CRD assurance practitioner to exercise such of the powers listed in section 34 in relation to the public entity concerned as the Auditor-General specifies in the appointment. 40 Section 35 amended (Delegation of powers) 25 After section 35(2)(a), insert: (aa) the power of appointment of CRD assurance practitioners under sec- tion 34A; or 41 Section 41 amended (Protection from liability) In section 41(1)(c), replace “or not” with “or an appointed CRD assurance 30 practitioner or neither”. 42 Section 42 amended (Audit fees) (1) In section 42(1), after “15,”, insert “15B,”. (2) In section 42(3), after “auditor”, insert “or an appointed CRD assurance practi‐ tioner”. 35 (3) Replace section 42(4) with: 32 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Part 3 cl 43 (4) The public entity must pay any fees to the Auditor-General, or to the appointed auditor or the appointed CRD assurance practitioner, on the completion of the whole or any part of the audit or assurance engagement when requested in writ‐ ing to do so. Subpart 2—Related and consequential amendments 5 43 Related and consequential amendments (1) Amend the Act specified in Part 1 of Schedule 3 as set out in that schedule. (2) Amend the Acts specified in Part 2 of Schedule 3 as set out in that schedule. 33 Financial Sector (Climate-related Disclosures and Other Schedule 1 Matters) Amendment Bill Schedule 1 New Part 7 inserted into Schedule 4 of Financial Markets Conduct Act 2013 s 20(2) Part 7 5 Provisions relating to Part 1 of Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 91AAA Interpretation in this Part In this Part, climate standard has the same meaning as in section 5(1) of the Financial Reporting Act 2013. 10 91 Definitions of large listed issuer, large, and large manager may take into account accounting periods that commence before commencement of clause In sections 461OA(1), 461P, and 461Q, a reference to preceding account‐ ing periods may include an accounting period regardless of whether the 15 accounting period commenced before, on, or after the commencement of this clause. 92 Climate-related disclosures for climate reporting entities under section 461O(1) (1) The following provisions of this Act apply to a climate reporting entity under 20 section 461O(1) in respect of accounting periods of the entity that commence on or after the date on which the External Reporting Board issues the first cli‐ mate standard that applies to the entity: (a) subpart 2 of Part 7A (which relates to CRD records): (b) subpart 3 of Part 7A (which relates to preparation of climate state‐ 25 ments): (c) subpart 5 of Part 7A (which relates to lodgement of climate state‐ ments). (2) The provisions listed in subclause (1) do not apply to a climate reporting entity under section 461O(1) in respect of accounting periods of the entity 30 that commence before the date on which the External Reporting Board issues the first climate standard that applies to the entity. 93 Climate-related disclosures relating to registered schemes (1) The following provisions of this Act apply to a climate reporting entity under section 461O(2) in respect of accounting periods of a registered scheme that 35 34 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Schedule 1 commence on or after the date on which the External Reporting Board issues the first climate standard that applies to the scheme: (a) subpart 2 of Part 7A (which relates to CRD records): (b) subpart 3 of Part 7A (which relates to preparation of climate state‐ ments): 5 (c) subpart 5 of Part 7A (which relates to lodgement of climate state‐ ments). (2) The provisions listed in subclause (1) do not apply to a climate reporting entity under section 461O(2) in respect of accounting periods of a registered scheme that commence before the date on which the External Reporting Board 10 issues the first climate standard that applies to the scheme. 35 Financial Sector (Climate-related Disclosures and Other Schedule 1A Matters) Amendment Bill Schedule 1A New Part 8 inserted into Schedule 4 of Financial Markets Conduct Act 2013 s 20J(3) Part 8 5 Provisions relating to Part 1A of Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 94 Interpretation in this Part In this Part,— commencement date means the commencement date of section 20D of the 10 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 new, in relation to a section of this Act, means the section as replaced or amended by a provision of Part 1A of the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 15 Part 7A assurance engagement obligations means— (a) new section 461ZD (which relates to assurance engagements required for parts of climate statements relating to greenhouse gas emissions); and (b) new section 461ZN (which relates to lodgement); and 20 (c) except in clause 95(2), new section 461ZO (which relates to annual reports). 95 Application of Part 7A assurance engagement obligations to accounting periods (1) The Part 7A assurance engagement obligations apply to a climate reporting 25 entity under section 461O(1) in relation to the following accounting periods of the climate reporting entity: (a) an accounting period that commenced before, but ends on or after, the commencement date: (b) accounting periods that commence on or after the commencement date. 30 (2) The Part 7A assurance engagement obligations apply to a manager of a regis‐ tered scheme that is a climate reporting entity in respect of the scheme in rela‐ tion to the following accounting periods of the scheme: (a) an accounting period that commenced before, but ends on or after, the commencement date: 35 (b) accounting periods that commence on or after the commencement date. 36 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Schedule 2 Schedule 2 New Part 2 inserted into Schedule of Financial Reporting Act 2013 s 35(2) Part 2 Provisions relating to Financial Sector (Climate-related Disclosures 5 and Other Matters) Amendment Act 2021 4 Interpretation In this Part, 2021 Amendment Act means the Financial Sector (Climate-rela‐ ted Disclosures and Other Matters) Amendment Act 2021. 5 Guidance may apply to accounting periods that commence before section 10 19A commences Guidance issued by the Board in accordance with section 19A (as inserted by section 28 of the 2021 Amendment Act) may apply in relation to— (a) accounting periods that commence before, but end on or after, the com‐ mencement of section 19A: 15 (b) accounting periods that commence on or after the commencement of section 19A. 6 Climate standards and authoritative notices may apply to accounting periods that commence before clause commences (1) Climate standards issued by the Board may apply in relation to— 20 (a) accounting periods that commence before, but end on or after, the com‐ mencement of this clause: (b) accounting periods that commence on or after the commencement of this clause. (2) Authoritative notices issued by the Board for the purposes in section 12(c)(ii) 25 may apply in relation to— (a) accounting periods that commence before, but end on or after, the com‐ mencement of this clause: (b) accounting periods that commence on or after the commencement of this clause. 30 7 Transitional provisions relating to review of monetary amounts in sections 461P and 461Q of Financial Markets Conduct Act 2013 (1) Subclause (2) applies if section 32(1) of the 2021 Amendment Act (which amends section 48(1)(a) of this Act) comes into force before 1 April 2022. 37 Financial Sector (Climate-related Disclosures and Other Schedule 2 Matters) Amendment Bill (2) The monetary amounts in sections 461P and 461Q of the Financial Markets Conduct Act 2013 do not need to form part of the first review under section 48(2) of this Act. (3) Subclause (4) applies— (a) if the monetary amounts in sections 461P and 461Q of the Financial 5 Markets Conduct Act 2013 do not form part of the first review under section 48(2) of this Act: (b) despite the date on which section 33 of the 2021 Amendment Act (which amends section 49 of this Act) comes into force. (4) The Minister’s recommendation (if any) under section 48(1)(b), after conduct‐ 10 ing the first review, must not include a recommendation for the purposes of section 49(i) or (j). 38 Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill Schedule 3 Schedule 3 Related and consequential amendments s 43 Part 1 Consequential amendment to come into force on day after Royal 5 assent Climate Change Response Act 2002 (2002 No 40) In section 4(1), replace the definition of entity with: entity, in relation to a group, means— (a) a reporting entity within the meaning of paragraph (a) of the definition 10 of that term in section 5 of the Financial Reporting Act 2013; or (b) a subsidiary (within the meaning of section 5 of the Financial Reporting Act 2013) of a reporting entity referred to in paragraph (a) Part 2 Amendments to come into force by first anniversary of Royal assent 15 Companies Act 1993 (1993 No 105) After section 211(1)(c), insert: (ca) if the company is required to prepare climate statements or group cli‐ mate statements under section 461W or 461X of the Financial Mar‐ kets Conduct Act 2013 for the accounting period, include the matters 20 required by section 461ZO(1) of that Act; and Financial Markets Authority Act 2011 (2011 No 5) In section 4, definition of financial markets participant, after paragraph (b)(iv), insert: (v) a climate reporting entity (within the meaning of section 461O of the 25 Financial Markets Conduct Act 2013); and Insurance (Prudential Supervision) Act 2010 (2010 No 111) In section 238(1)(b), replace “from being—” with “—”. Replace section 238(1)(b)(i) with: (i) from being— 30 (A) an FMC reporting entity (and, consequentially, a climate reporting entity) for the purposes of the Financial Markets Conduct Act 2013 by virtue of section 451(1)(h) of that Act; or 39 Financial Sector (Climate-related Disclosures and Other Schedule 3 Matters) Amendment Bill Insurance (Prudential Supervision) Act 2010 (2010 No 111)—continued (B) a climate reporting entity for the purposes of the Financial Markets Conduct Act 2013 by virtue of section 461O(1)(c) of that Act: In section 238(1)(b)(ii), before “an issuer”, insert “from being”. Legislative history 12 April 2021 Introduction (Bill 30–1) 15 April 2021 First reading and referral to Economic Development, Science and Innovation Committee 16 August 2021 Reported from Economic Development, Science and Innovation Committee (Bill 30–2) 28 September 2021 Second reading 19 October 2021 Committee of the whole House (Bill 30–3) Wellington, New Zealand: Published under the authority of the House of Representatives—2021 40