New Zealand Proposes Adopting IFRS S2 as New Climate Reporting Standard
New Zealand’s External Reporting Board (XRB) announced the launch of a new consultation into a proposal to adopt a new climate reporting standard based on the IFRS Foundation’s IFRS S2 as the basis for its climate disclosure regime, although the new standard would only become mandatory for companies beginning in 2033 under the proposal.
New Zealand has had a mandatory climate reporting system in place for financial services and publicly listed companies since 2024, utilizing TCFD-based New Zealand Climate Standards (NZ CS) developed prior to the release of the IFRS Foundation’s standards. The government has recently proposed lifting the reporting threshold for listed companies covered by its climate-related disclosure to apply only to issuers with NZ$1 billion or greater market cap or debt face value.
According to the XRB, adopting an IFRS S2-based standard would bring a series of benefits, including international alignment, and harmonizing with Australia’s IFRS-based AASB S2 standard, enabling reduced duplication when reporting across borders and allowing users to better compare and understand disclosures, while noting as well that there would be transition costs and implementation challenges associated with the change.
The IFRS released its inaugural general sustainability and climate reporting standards in June 2023. To date, more than 40 jurisdictions globally have adopted or started the process to use the standards.
In its new draft climate reporting roadmap, the XRB highlighted some of the key similarities and differences between the current NZ CS and the IFRS S2 standard, noting that while both are built around the same TCFD-style pillars of governance, strategy, risk management, and metrics and targets, and are aligned on concepts such as materiality, the IFRS S2 is generally more specific and prescriptive, including more detailed requirements in areas such as connected information, significant judgements, value chain considerations, and transition plan assumptions.
Among other significant differences, IFRS S2 also requires more disclosures in metrics and targets and requires the use of the GHG Protocol to measure GHG emissions.
Under the XRB’s new proposal, companies would have a long transition period to shift to the new standard, with disclosures using either the NZ CS or IFRS S2 allowed until 2033, after which time IFRS S2 would become the mandatory standard.
The XRB said:
“We are proposing a strategic direction for the next phase of climate reporting—one that aims to keep New Zealand aligned internationally, harmonised with Australia, and remain fit for our local context.”
The consultation on the new proposals is open until September 30, 2026. Click here to access the consultation.