New Zealand Considers Shift to IFRS S2 Climate Reporting Standards

New Zealand is considering aligning its climate reporting framework with the International Financial Reporting Standards (IFRS) Foundation by adopting IFRS S2 Climate-related Disclosures as its new benchmark for corporate reporting. The External Reporting Board (XRB), which oversees accounting and sustainability standards in the country, has launched a public consultation on the proposal.

New Zealand’s Long Transition Plan Toward IFRS S2 Adoption

The transition, however, would not happen immediately. The XRB has outlined a lengthy roadmap in which companies would continue using the existing New Zealand Climate Standards (NZ CS) for an extended period. Under the current proposal, IFRS S2 would only become mandatory from 2033, effectively replacing NZ CS after more than a decade of gradual transition.

According to the XRB, this phased approach is designed to give businesses sufficient time to adjust their systems, processes, and reporting capabilities. It also aims to reduce disruption while ensuring that companies can build the necessary expertise to comply with the more detailed international framework.

Greater Global Alignment and Enhanced Disclosure Requirements

A key objective of the proposal is to improve international consistency in climate-related reporting. The XRB notes that adopting IFRS S2 would strengthen alignment with global standards, making it easier to compare corporate disclosures across jurisdictions and reducing duplication for companies operating in multiple markets. This is particularly relevant given that Australia has already adopted IFRS-based climate reporting standards, creating opportunities for closer regional harmonisation.

The current New Zealand standards and IFRS S2 are both built on the four pillars of the Task Force on Climate-related Financial Disclosures (TCFD): governance, strategy, risk management, and metrics and targets. However, IFRS S2 introduces more detailed and prescriptive requirements, raising the level of specificity in corporate reporting.

Among the key changes added by adopting IFRS S2 are expanded disclosures across the value chain, clearer explanations of significant judgments used in reporting, and more detailed descriptions of assumptions underlying corporate transition plans. Companies would also need to provide enhanced information on climate-related metrics and targets. In addition, IFRS S2 requires the use of the Greenhouse Gas (GHG) Protocol as the standard methodology for measuring emissions, ensuring greater consistency and comparability.

The public consultation on the proposal of the IFRS S2 adoption remain open until 30 September 2026. After the consultation period ends, the XRB will review all submissions before making a final decision on whether and how to proceed with the transition toward IFRS S2 adoption.

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(Featured image by Sulthan Auliya via Unsplash)

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