FMA publishes scenario analysis information sheet for Climate Related Disclosures regime
FMA publishes scenario analysis information sheet for Climate Related Disclosures regime
The Financial Markets Authority (FMA) has issued a scenario analysis information sheet to help climate reporting entities (CREs) meet their obligations under the Climate-Related Disclosures (CRD) regime.
CREs will have to make annual disclosures covering:
- governance arrangements,
- risk management,
- strategies
- and metrics and targets
for mitigating and adapting to climate change impacts.
CREs consist of:
- All registered banks, credit unions, and building societies with total assets of more than $1 billion.
- All managers of registered investment schemes (other than restricted schemes) with greater than $1 billion in total assets under management.
- All licensed insurers with greater than $1 billion in total assets or annual premium income greater than $250 million.
- Listed issuers of quoted equity securities with a combined market price exceeding $60 million.
- Listed issuers of quoted debt securities with a combined face value of quoted debt exceeding $60 million.
- Authorised Bodies, who are managers of registered schemes and operate under the licence of another manager, where the total assets under that licensee (including assets of all authorised bodies) exceeds $1 billion.
Under the CRD regime, CREs are required to undertake scenario analysis and disclose how the process was conducted in their annual climate statements as required by the External Reporting Board’s (XRBs) Aotearoa New Zealand Climate Standards.
The FMA’s scenario analysis information sheet explains the FMA’s expectations for these scenario analysis disclosures.
It should be noted that scenario analysis is a strategic tool where CREs construct plausible pathways leading to different future worlds (i.e., scenarios) and analyse how resilient their current business model and strategy would be if it was placed within these scenarios.
Scenario analysis forms part of the requirements under the strategy pillar of the CRD reporting regime. The other three pillars are risk management, governance, and metrics and data.
For the full suite of CRD documents released by the FMA please click here.