Sustainability reporting for NZX listed companies

Sustainability reporting is encouraged, or mandatory, for listed companies on many overseas stock exchanges, and it looks like New Zealand will soon be following suit.

Many stock exchanges require or encourage listed companies to produce and make ESG (environmental, social and governance) disclosures and at last count there were 180 laws and regulatory standards in 45 countries calling for some aspect of corporate sustainability reporting.

The NZX has signalled we are headed down the same road in NZ. In an open consultation review of its Listing Rules for Corporate Governance Reporting the NZX has raised with stakeholders a potential need to provide listed companies guidance on ESG reporting.

Feedback has been sought and the outcomes of the review will be implemented early next year. The recommendation is for companies to voluntarily report environmental, social and corporate governance disclosures that are material (i.e. important to the organisation and its stakeholders) and comparable with other listed companies.

It is likely a framework for undertaking this reporting will be recommended, with the Global Reporting Initiative (GRI) framework proving to be the most popular choice amongst stakeholders who have participated in the review.

What does this mean for listed companies in NZ?

We cannot draw any firm conclusions until the outcome of the review is made public in early 2017 and changes to the Listing Rules are implemented. It is evident from the discussion paper and subsequent consultation paper that the NZX is expecting some commentary on ESG from issuers and that it will likely provide guidance on how issuers are to go about this.

As a result, we expect to see an increase in the number of organisations producing some form of sustainability report, particularly listed companies.

Last year in New Zealand 34 organisations published sustainability reports, with 61% coming from listed companies. Of those, 60% used the GRI framework. This year the numbers look to be similar but next year we are likely to see a sharp rise.

At Catalyst we have already had enquiries from listed companies on how to prepare a sustainability report, on the back of the NZX review. Once rule changes are implemented we expect to field more.

What should a listed company do to prepare?

Our advice is to keep a watching brief on the review process. NZX has signalled an intention to implement the review outcomes in the first quarter of 2017. It will be at this time that listed companies will know what, if any, obligations they have to report ESG disclosures.

Based on worldwide trends it is likely the NZX will encourage ESG reporting, but with flexibility around what framework to use. GRI is one framework identified by NZX to meet most NZ reporting needs and it would be useful for companies wanting to prepare for these changes to familiarise themselves with the newly published GRI reporting standards.

How Catalyst can help

For companies interested in ESG reporting, a good starting point is to hold a workshop or working meetings to assess your organisation’s readiness to report.

We can facilitate and chair these workshops, bringing together the appropriate people and working through a checklist of reporting requirements. From here, we can work with you to develop a road map to address gaps, if any, and to decide on a reporting framework and report content tailored to your organisation’s needs.

Beyond this, we can also assist with report writing or reviewing. For more information or a detailed description of our reporting services please contact Wymond.

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