In order to enhance market transparency, encourage low emission investment in the market and create a fair competition environment for enterprises that have fully considered climate change in their investment and operation activities, the New Zealand government recently decided that enterprises in specific industries need to disclose information in the field of climate change, becoming the first country in the world to force enterprises to disclose reports in the field of climate change.

The objects that are required to disclose climate change information include listed companies, large insurance companies, banks, investment managers, etc. The system is expected to take effect as early as 2023. This not only makes the information transmitted by enterprises provide more accurate pricing signals, but also helps to increase the attention of the public and stakeholders in the field of emission reduction and climate change.

Enterprises should disclose information around four areas

There are about 200 entities in New Zealand that require climate related financial disclosure (which has already been disclosed by some companies), including all registered banks, credit unions and housing associations with total assets of more than $1 billion; managers of all registered investment plans with total assets under management of more than $1 billion; and all over $1 billion in total assets or more than $250 million in annual premium income , all issuers of shares and debt listed on the New Zealand Stock Exchange (NZX); and official financial institutions with total assets under management of more than $1 billion.

Among them, the managers of registered investment plans will be required to disclose the funds one by one. This will ensure that investors have the information they need to understand the impact of climate change on their future investment performance.

New Zealand has set up a working group on climate related financial disclosure (TCFD). TCFD recommends that companies that need to disclose information should disclose information around four subject areas. These four subject areas represent the core elements of an enterprise's operation, namely, corporate governance, corporate development strategy, corporate risk management and corporate operational indicators. These four core contents need to be fairly and completely disclosed in the formal report.

China's emission enterprises can learn from the international framework to improve the integrity of climate related information disclosure

The disclosure of climate change information by key pollutant discharge enterprises or listed companies can increase corporate reputation and gain competitive advantage. Increasing the information disclosure in the field of climate change can improve the integrity of enterprise disclosure information and reduce the uncertainty of investors for enterprises. At the same time, it can show that enterprises are actively fulfilling their social responsibilities for products and investment markets, leaving a good impression on consumers and investors, so as to gain competitive advantages.

Chinese enterprises can learn from the international framework to improve the integrity of disclosure. In 2017, KPMG, one of the four largest international accounting firms, assessed the environmental reports issued by New Zealand enterprises. According to the assessment, the global environmental reporting system is widely used by New Zealand enterprises. These systems become an important tool for them to publish information integrity and compliance. At present, there are many mainstream environmental reporting organizations in the world, such as sustainability accounting standards board, International Integrated Reporting Council, institutional investors group on climate change, etc. The reporting framework, ideas and forms provided by these international organizations can be used for reference by Chinese enterprises.

Government regulators should formulate policies to include the information in the field of enterprise climate change into environmental report disclosure

TCFD guides the content and form of release. In October 2019, TCFD released the climate related financial disclosure: discussion document to understand the business risks and opportunities of the public and listed companies related to climate change, and put forward suggestions for the subsequent release of mandatory principles and climate related financial disclosure system. In March this year, the Ministry of environment of New Zealand released the climate related financial disclosure summary of submissions in response to the consultation results, explaining why the disclosure in the field of climate change is needed, how to release it and the next step of work.

The supervision of environmental report issued by enterprises in China started later than that in western countries. In December 2017, the standards for information disclosure content and format of companies offering securities to the public ([2017] No. 17 and No. 18) issued by China Securities Regulatory Commission clearly states that key pollutant discharge units or their important subsidiaries that belong to the ecological environment department (the original environmental protection department) shall disclose the core environmental information in the annual report and semi annual report of the enterprise. This is an important measure to promote the environmental information disclosure of listed companies jointly by the Ministry of ecological environment and China Securities Regulatory Commission. It standardizes the environmental information disclosure of listed companies, which is conducive to the stakeholders to judge the environmental risks of listed companies more accurately.

With the change of economic and social development and environmental protection situation, the contradiction in the field of climate change is prominent. Our government should also guide enterprises to increase the disclosure of information in the field of climate change, actively absorb international experience, solicit opinions from relevant subjects on the feasibility of information disclosure in the field of climate change, and adopt scientific and effective methods to promote the information disclosure in the field of climate change To promote listed companies or high pollution enterprises to further fulfill their social responsibilities.

The relevant government departments should strengthen the quality supervision of information disclosure. The quality of environmental report information in China has a great room for improvement.

In November this year, China Association of Environmental Journalists and Beijing University of chemical technology released a research report on the environmental information disclosure of Listed Companies in China, the evaluation report on environmental responsibility information disclosure of Listed Companies in China (2019), pointing out that at present, about 70% of Listed Companies in China have not disclosed environmental information, and the quantity and quality of disclosure are still at a relatively low level. This shows that there is still much room for progress in China's regulatory level.

In the face of the complicated but not unified way of report release, report release media and report release time, the relevant government departments should formulate policies to standardize the form, quality and time of disclosure, and strengthen the supervision of enterprise environmental information disclosure.

Source: China Environment News