Inside New Zealand's climate disclosure reporting: the Scope 3 emissions hurdle

In 2023, New Zealand became one of the first countries to mandate climate-related financial disclosures. Three years on, Climate Reporting Entities (CREs) have now completed multiple reporting cycles under the Aotearoa New Zealand Climate Standards (NZ CS), and the results tell an important story.

Built on TCFD recommendations and mandated under the Financial Markets Conduct Act 2013, NZ CS requires CREs to disclose across four pillars, namely Governance, Strategy, Risk Management, and Metrics and Targets. Registered banks, licensed insurers, and NZX-listed issuers above certain thresholds all fall within scope.

So what has two-plus years of mandatory reporting actually revealed? The one issue that towers above the rest is Scope 3 emissions. It has proven far more complex, costly, and resource-intensive than anyone anticipated. The XRB has extended Scope 3 deadlines twice. The government is narrowing who must report and the FMA’s reviews show that disclosure quality across the market remains uneven. Here’s what we’ve learned and what it means for your business.

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The Scope 3 problem and why the XRB had to hit pause twice

When NZ CS launched, Scope 3 was expected to become a standard part of disclosures within a few reporting cycles but reality shows otherwise.

The XRB’s Sustainability Reporting Board has now extended Scope 3 adoption provisions twice, first in November 2024, then for two further years, pushing full disclosure requirements out to Year 5 (from December 2027). Entities told the XRB the same thing, that Scope 3 is far more complex and costly than originally anticipated.

Here’s where it gets difficult:

• Suppliers, customers, and logistics providers often don’t track their own emissions, or use completely different methodologies when they do.

• New systems and processes are needed to capture, validate, and consolidate Scope 3 data at the granular level required for assurance.

• Estimation involves significant judgement, and the lack of standardised approaches across industries makes it hard to compare reports.

• Costs add up quickly. Ministry of Business, Innovation and Employment (MBIE) has received 93 submissions flagging that compliance costs were high and disproportionate for some entities.
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But here’s the interesting part. Despite all of this, 20 CREs voluntarily obtained assurance over all or part of their Scope 3 emissions. These organisations are treating the extension as a head start, not a holiday. They’re building the infrastructure now so they’re not scrambling near the deadline.

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The FMA found that too many reports lack substance

Two years in, you’d expect disclosure quality to be converging, but it hasn’t. The FMA’s 2025 review found a wide spectrum of quality across climate statements, from high-quality reports with minimal findings to those riddled with gaps. The distance between leaders and laggards is growing, not shrinking.

Here is what keeps showing up in the FMA’s feedback.

• Generic risk descriptions. Too many companies are reporting broad statements about climate risk without explaining how it affects their specific business, supply chain or financial position. The FMA wants to see entity-specific detail that connects climate risks directly to your operations.

• Immaterial risks cluttering reports. Companies are listing every possible climate related risk they can think of, regardless of whether it is relevant to their business. This approach dilutes what actually matters and makes it harder for investors to identify the risks that could genuinely affect performance. Strong materiality assessments are essential, and reports should focus on the risks that are most significant to your specific organisation.

• Missing timeframes. Many disclosures describe climate risks and opportunities without specifying when they are expected to materialise. Companies are leaving out the short, medium, and long-term horizons that give these risks strategic context. Without clear timeframes, investors can’t assess your preparedness or distinguish between risks that need immediate action and those that is in the long term.

• Over-reliance on climate model averages. Companies are defaulting to averaged climate scenarios that smooth over the extremes, which can mask the most significant outcomes. The FMA expects more nuanced scenario analysis that captures the full range of potential impacts.

The takeaway is simple. The FMA is raising the bar, not lowering it. Entity-specific, material, and time-bound disclosures are what good looks like. If your report reads like it could belong to any company in your sector, it’s not good enough.

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Fewer companies need to report, but expectations are higher than ever

The New Zealand government has made some notable changes to the climate reporting regime. The mandatory threshold for listed issuers has jumped from NZ$60 million to NZ$1 billion. Managed investment schemes have been removed entirely. These changes are being formalised through the Financial Markets Conduct Amendment Bill in 2026, and the FMA has adopted a ‘no action’ approach for affected CREs in the interim.

Fewer companies in scope might sound like a loosening of the rules, but that isn’t the case.

• The entities that remain in scope will face sharper scrutiny. The FMA is concentrating its oversight on the largest and most systemically important organisations.

• Scope 3 has been extended, not scrapped. The requirement is still coming. Companies that pause their Scope 3 efforts now will face a steeper climb when the deadline arrives.

• Transition planning is mandatory from Year 2 with no extension. The XRB clearly considers transition plans non-negotiable, regardless of the Scope 3 timeline.

• Assurance keeps tightening. Scope 1 and 2 GHG assurance has been mandatory since October 2024. Scope 3 assurance will follow. Building assurance-ready data systems now avoids costly retrofitting later.

The direction hasn’t changed. Climate disclosure is here to stay, and the standard will only get more demanding from here.

How the Scope 3 challenge plays out across New Zealand’s key sectors

Scope 3 is not a one-size-fits-all problem. The data you need, the partners you depend on, and the complexity you face all vary by industry. Here’s what the challenge actually looks like in three of New Zealand’s most affected sectors.
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1. Marine and Ports Infrastructure

New Zealand’s port sector was among the first to publish climate disclosures under NZ CS. Being an early mover has set the pace for infrastructure-level transparency, but it’s also exposed just how difficult ongoing reporting is.

Port operations span heavy diesel equipment, shore power systems, warehousing, and landside transport, all generating emissions at the asset level. Scope 3 is especially tricky because ports sit at the centre of national supply chains. Measuring emissions across shipping lines, freight operators, and landside transport means relying on data from parties who may not track their own emissions consistently. Add in the fleet electrification transition, where ports need to track real-time reductions across mixed diesel-electric fleets, and the data challenge multiplies.

Key actions for marine and ports.

• Track fleet electrification impact at the asset level in real time, not just at year-end.

• Engage shipping lines and freight operators on Scope 3 data sharing early. This will be the hardest category to get right.

• Centralise fuel records, electricity meters, contractor reports, and equipment logs into one system before the next reporting cycle.
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2. Construction and Building Materials

Construction companies operating across New Zealand and Australia face a dual-reporting challenge. NZ CS disclosures are now in their second cycle, while AASB S2 is in effect across the Tasman. A cement factory, a residential development, and an active construction site have completely different Scope 3 profiles, yet they all need to roll up into one group-level dataset that satisfies both frameworks.

The project-based nature of construction makes this even harder. Emissions come in bursts tied to individual builds that can run for years with hundreds of subcontractors. A single major project involves thousands of tonnes of concrete, steel, and timber, each measured differently. When 74% of product revenue comes from sustainably certified products, proving those certifications with auditable, project-level data becomes the real bottleneck.

Key actions for construction.

• Build project-level and material-level tracking that handles different methodologies for cement, steel, concrete and timber.

• Consolidate data into one platform that serves both NZ CS and AASB S2 to avoid duplicating effort across markets.

• Start engaging subcontractors and material suppliers on emissions data now, before Scope 3 assurance requirements kick in.
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3. Energy and Utilities

New Zealand’s energy sector sits in a unique position. Around 80% of the country’s electricity already comes from renewable sources. That means the decarbonisation conversation here is less about switching fuel sources and more about managing the complexity of a mixed generation portfolio, tracking gas-fired peaking plant emissions, and accounting for transmission losses across the grid.

Scope 3 for utilities sits in downstream customer energy usage, upstream fuel supply chains, and the lifecycle impacts of infrastructure assets. NZ CS also requires GHG emissions intensity disclosure, something IFRS S2 does not explicitly require. This means energy companies need to track emissions per unit of output alongside absolute figures, adding another data layer to manage.

Key actions for energy and utilities.

• Build GHG intensity tracking alongside absolute emissions to meet the NZ CS-specific requirement.

• Map downstream Scope 3 categories early. Customer usage emissions are one of the largest and most difficult categories for utilities to quantify.

• Go beyond climate model averages in scenario analysis. The FMA expects nuanced analysis across at least 1.5°C and 3°C pathways.

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Building for what comes next

New Zealand’s two-plus years of mandatory reporting have given the market something most countries don’t have yet, which is proof of what works and what doesn’t. The Scope 3 extensions are not a green light to slow down. They’re an acknowledgement that the work is hard and companies need to invest seriously in data, systems and value chain engagement. With transition planning mandatory and no extension in sight, the FMA is raising its expectations and putting report quality under the spotlight. The companies that use this period to build real capability will be the ones that stand out when the full requirements take effect.

Want to explore how Zuno Carbon can support your business’s climate disclosure journey? Book a demo with our team today.

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FAQs

1. What is NZ CS and who does it apply to?

NZ CS (Aotearoa New Zealand Climate Standards) is New Zealand’s mandatory climate disclosure framework, in effect since 1 January 2023. It applies to registered banks, credit unions, and building societies with assets of NZ$1 billion or more, licensed insurers with assets of NZ$1 billion or more or annual premium income of NZ$250 million or more, and NZX-listed equity and debt issuers with a market capitalisation or face value exceeding NZ$1 billion.

2. Why has Scope 3 been extended under NZ CS?

The XRB extended Scope 3 adoption provisions twice because entities reported that disclosing and assuring Scope 3 was far more complex, costly, and resource-intensive than anticipated. Challenges include difficulty collecting data from value chain partners, the need for new systems and processes, and an economically challenging environment. Full Scope 3 disclosure is now expected from Year 5 (December 2027 onwards).

3. What changes is the government making to climate reporting?

The government has raised the mandatory reporting threshold for listed issuers from NZ$60 million to NZ$1 billion and removed managed investment schemes from the regime. These changes are being formalised through the Financial Markets Conduct Amendment Bill in 2026. The FMA has adopted a ‘no action’ approach for affected entities in the interim.

4. What did the FMA find in its 2025 review?

The FMA found a wide spectrum of quality across CRE climate statements. Recurring shortcomings included generic risk descriptions that lacked entity-specific detail, inclusion of immaterial risks, missing timeframes, and over-reliance on climate model averages. The FMA has set new focus areas around the effectiveness of CREs’ identification and assessment processes for climate-related risks and opportunities.

5. Should companies still invest in Scope 3 if the deadline has been extended?

Yes. Twenty CREs have already voluntarily obtained assurance over their Scope 3 emissions, showing that leading organisations are using this period to build capabilities. Building the data systems, supplier engagement frameworks, and estimation methodologies needed for Scope 3 takes significant time. Starting now avoids a costly scramble when the adoption provisions expire.

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