The Financial Edge of Climate Disclosure in Australia and New Zealand

Financial quantification is now the “hard edge” of climate impact assessment and reporting for trans-Tasman businesses. In both Australia and New Zealand, businesses need to know how climate-related risks and opportunities translate into financial performance, financial position and future cash flows, following the lead of the climate reporting regimes in each country (AU AASB and NZ CS 1-3).

What does this mean for your business?
Whether or not your organisation is currently mandated to report under the Australian (AASB S2) regime or the New Zealand Climate Standards (NZ CS 1–3), the direction of travel is clear: climate risk needs to be viewed through a financial lens.
Investors, lenders, insurers, regulators and customers are asking similar questions — how exposed are you, what does it mean for earnings and asset values, and how resilient are your future cash flows? Even where formal disclosure is not yet required, expectations around financial transparency and preparedness are rising.

For businesses that have not yet financially quantified climate risks, opportunities or current impacts, this presents both a risk and an opportunity: A risk of being unable to respond confidently to investors, customers, auditors, boards or supply chain partners, and an opportunity to strengthen strategic decision-making, capital allocation and long-term resilience.

Financial quantification of climate impacts is now a critical aspect of corporate financial management and strategy.

One evolving financial expectation
Taken together, the Australian Sustainability Reporting Standard (AASB S2) and the New Zealand Climate Standards (NZ CS 1–3) create a largely interoperable framework that requires entities to connect climate drivers directly to financial outcomes. While both regimes seek to understand how entities’ financial performance is impacted by current and anticipated climate impacts, the Australian standards take a more prescriptive approach compared to New Zealand.

• Both regimes are structured around governance, strategy, risk management, and metrics and targets — and require entities to assess materiality through a financial lens, supported by scenario analysis and value chain coverage.
• Both expect entities to explain and, where reasonably possible, quantify how climate-related risks and opportunities affect revenues, operating costs, asset values, liabilities, capital allocation decisions and cash flows. Even where precise measurement is not yet possible, ranges, sensitivities and directional estimates are expected.

For groups operating across one or both countries, the implications of climate scenarios must be translated into impacts on earnings, balance sheet positions and longer-term enterprise value.

How financial quantification shows up in practice
In practice, AASB S2 and NZ CS 1–3 drive similar financial disciplines, even if technical wording differs.

• AASB S2 reinforces this by requiring disclosure of material climate-related effects on specific financial statement line items (for example impairments, provisions, changes in useful lives, fair value measurements and expected credit losses) and the climate assumptions embedded within them.
• NZ CS 1 requires disclosure of current and anticipated financial impacts of climate-related risks and opportunities, while NZ CS 3 sets expectations around scenario design, assumptions, time horizons and methodological transparency — all of which underpin forward-looking financial estimates.

A practical roadmap focused on financial integration
Rather than approaching each jurisdiction in isolation, many organisations are identifying opportunities to align methodologies and financial modelling foundations while remaining responsive to local regulatory nuances.

• Clarify scope and reporting boundaries: Identify in-scope entities under AASB S2 and NZ CS and understand how each regime frames financial impact disclosure at entity and consolidated levels.
• Align core assumptions: Establish a coherent set of climate scenarios, time horizons and macro-financial assumptions to support impairment testing, provisioning models, capital planning and valuation processes. Use the chosen scenarios to help uncover key climate-related risks and opportunities that could impact an entity’s business model, strategy and value chain.
• Prioritise financially material risk and opportunity hotspots: Focus early quantification on the assets, portfolios, geographies and value chain segments most likely to drive material climate-related impacts on earnings, balance sheet strength or funding costs.
• Embed into finance and risk systems: Integrate climate assumptions into budgeting, forecasting, capital allocation, treasury, and risk modelling processes – supported by controls and governance robust enough to withstand audit and assurance scrutiny.

Financial quantification is not simply a matter of meeting climate disclosure requirements. They represent a structural shift toward making climate assumptions visible within core financial reporting, bridging the gap between climate narratives and measurable financial outcomes.

What next?
If you are a director, CEO, CFO, risk leader or investor grappling with how climate assumptions translate into financial statements, we can help. We work alongside businesses to navigate and build financial quantification of climate-related risks and opportunities using and evolving their existing risk and financial practices — we leverage, adapt and improve existing processes and systems rather than creating something new from scratch.

The shift is underway. The organisations that treat financial quantification as a strategic discipline – not just a disclosure requirement – are likely to be better positioned in conversations with boards, auditors, investors and regulators alike.

To discuss how your business can effectively navigate and integrate financial quantification of climate-related risks and opportunities into your core reporting and strategic decision-making, please contact Monica Brbich, Client Advisor +64 21 877 932 or [email protected] or Allan Birch on +64 21 930 992, [email protected]

Modern Slavery Reporting is coming to NZ:
Are you ready?

New Zealand is poised to introduce mandatory modern slavery reporting legislation requiring businesses with revenue over $100 million to disclose how they manage modern slavery risks across their operations and supply chains. The regime will also capture overseas companies carrying on business in New Zealand during a reporting period, as well as companies that directly or indirectly control a reporting entity – including parent companies.

The anticipated Modern Slavery Bill will align with global efforts to detect and address forced labour and other abusive working conditions, which businesses should be aware of when assessing risk in their operations and suppliers. The International Labour Organization’s 2025 Indicators highlight how people can be coerced or trapped through vulnerabilities, deception, movement and social restrictions, violence and threats, document and wage retention, debt, abusive conditions, and excessive working hours.

For many businesses, the Bill will not be entirely new. Australia’s Modern Slavery Act is already in force, with mandatory reporting, public scrutiny and increasing regulatory and stakeholder expectations – offering a clear preview of where NZ is heading.

Modern slavery under the proposed New Zealand Bill is broadly defined as:

• An offence under section 98, 98AA, 98D, or 207A of the Crimes Act 1961
  • Dealing in slaves
  • People smuggling and trafficking
  • Dealing in people under 18 for sexual exploitation, removal of body parts, or engagement in forced labour
  • Coerced marriage or civil union
• The worst forms of child labour
• Debt-bondage or serfdom
• Forced or exploitative labour:
  • Servitude
  • Slavery

The key requirement of the draft Bill proposes that mandated entities disclose the modern slavery risks in their business and how these are managed via an annual Modern Slavery Statement. The Statement must outline the entity’s structure, operations and supply chains, disclose any modern slavery incidents and identified risks, detail the actions and due diligence undertaken to address them – including complaints processes, remediation, effectiveness assessments, training and consultation – and include any additional information required by regulation.

Specifically, the Statement must include:

• Entity name and overview of structure, operations and supply chains (including owned/controlled entities).
• Modern slavery incidents identified in operations or supply chains as well as known or potential modern slavery risks.
• Number of modern slavery-related complaints received.
• Actions taken to assess and address risks and incidents, including due diligence and remediation.
• How the effectiveness of those actions is evaluated.
• Modern slavery training provided to employees and relevant supply chain participants.
• Consultation undertaken in preparing the Statement.
• Any other information required by regulation.

Unlike Australia – where there are currently no financial penalties for non-compliance (though reforms are under consultation) – the proposed New Zealand Bill adopts a stricter enforcement model. If a reporting entity fails to prepare or publish a compliant annual Statement, or knowingly includes false or misleading information, it may face a fine of up to $200,000. In addition, the High Court may order a non-government reporting entity to pay a civil penalty to the Crown of up to $600,000.

Why is the Bill important?
The New Zealand legislation is approaching fast – it is not hypothetical. Early preparation reduces compliance risk and future cost.

Australian Modern Slavery requirements already affect trans-Tasman and supply-chain-linked businesses under the Australian Modern Slavery Act and this is expected to become more rigorous in the future with a consultation to further strengthen the Act currently underway.

Modern Slavery statistics at a glance

• Police stated there were 19 ongoing investigations in New Zealand in 2024 with a further 31 in 2025 (RNZ).
• In 2024-25, the Australian Federal Police received 420 reports of human trafficking and modern slavery – a 10% increase versus the previous year and nearly doubled compared to five years ago (https://www.antislaverycommissioner.gov.au).
• According to World Vision, New Zealand imported $7.9B of goods considered risky due to their association with child labour.

How to prepare
Entities, whether mandated to report on Modern Slavery or not are coming under increased scrutiny from stakeholders and investors around their labour practices, due diligence, and transparency. The proposed New Zealand Bill is not simply a compliance exercise. It is about running a socially sustainable business, risk management, commercial resilience, and maintaining access to customers, capital and international markets. As seen in Australia and other jurisdictions, regulators and customers are increasingly asking not just for statements of intent, but for evidence of a structured, repeatable process.

Organisations that act early will be better positioned to meet regulatory requirements, respond to customer questionnaires, and demonstrate credible oversight of labour risks across their operations and supply chains.

The key question is no longer whether scrutiny will increase – but whether your organisation is prepared for it.

Below are some tips to get started on preparing for Modern Slavery legislation in New Zealand.

1. Establish Governance
   • Outcome: Clear ownership and governance structure.
2. Map Operations & Supply Chains
   • Outcome: A documented supplier map.
3. Conduct a Risk-Based Assessment
   • Outcome: Risk-rated supplier and operational profile.
4. Prioritise & Engage
   • Outcome: Validated risks and identified gaps.
5. Address & Embed Controls
   • Outcome: Documented mitigation framework.
6. Monitor & Report
   • Outcome: Modern Slavery Statement and any other reporting as required.

A credible Modern Slavery Statement demonstrates a clear, repeatable process and year-on-year improvement – not perfection on day one.

How we can help
If your business operates in New Zealand or Australia, or has suppliers that may fall within scope, now is the time to put in place clear frameworks, due diligence processes and robust reporting capabilities.

Our readiness assessment provides a structured gap analysis of your current approach, then sets out a practical, step by step methodology to close those gaps and strengthen your governance, risk management and disclosures.

We can help you understand the detailed requirements and build compliant, practical reporting and risk mitigation strategies that align with both New Zealand’s evolving regime and Australia’s established framework.

If you are wondering what all this means for your business, please contact Monica Brbich, Client Advisor +64 21 877 932 or [email protected] or Allan Birch, Tadpole Director +64 21 930 992 or [email protected] to discuss where your organisation stands and your best next steps.

*Disclaimer: This article provides general information only and does not constitute legal advice; entities should seek independent legal advice tailored to their specific circumstances.