First In, First Out: New Zealand Retreats On Climate Legislation

New Zealand holds a peculiar distinction: it was the first country in the world to mandate climate-related disclosures, and now it is actively dismantling the accountability architecture it built. Two moves in quick succession tell the story:

• In October 2025, the government scaled back its climate-related disclosures (CRD) regime, raising the reporting threshold for listed issuers from $60 million (NZD) to $1 billion market capitalization and removing managed investment scheme managers entirely, cutting the number of reporting entities from around 164 to 76.
• In May 2026, the government announced an amendment to the Climate Change Response Act 2002 to prevent courts from finding businesses liable in private cases for climate-related harm caused by greenhouse gas emissions. Among other things, this ruling kills Michael John Smith v Fonterra Co-operative Group Limited, a landmark High Court case brought by Māori activist Michael John Smith against six major emitters, which was due to go to trial in 2027.

The government says these changes will reduce compliance costs and support business confidence. In practice, they simultaneously remove two of the levers that Verdantix research identifies as primary catalysts for corporate sustainability investment: mandatory disclosures and litigation risk. The latter is a force that has driven action across over 3,099 climate cases filed across nearly 60 countries as of mid-2025. Remove both at once, and the incentive to act weakens considerably.

Some firms may feel freed to set bolder climate targets without fear that ambitious commitments will become legal liabilities – a partial antidote to the greenhushing that liability concerns have encouraged. Others may simply do less, in an environment with fewer consequences for inaction.

Not everything has shifted, however:

• The CRD regime still applies to entities above the new thresholds, and those entities are still required to obtain independent assurance of their GHG emission disclosures.
• Voluntary reporting remains subject to anti-misleading provisions under the Financial Markets Conduct Act.
• Global capital markets have not followed New Zealand's lead: investors, lenders and trading partners continue to expect credible climate data regardless of what domestic law requires.

That last point deserves emphasis – the scenario analysis, transition plans and assured GHG figures that the CRD regime requires have become the currency of investor and lender decision-making. Creditworthiness, capital allocation and risk pricing increasingly depend on these initiatives. Two-thirds of investors plan to increase allocations to sustainable investments, and they are growing more exacting about it: New York City's pension funds have already called out BlackRock and Fidelity for insufficient climate alignment. Firms that stop producing credible climate data become harder to evaluate, and that opacity carries its own cost of capital.

New Zealand businesses – whether inside or outside the CRD regime – should not read deregulation as a green light to proceed with fewer responsibilities. Physical and transition risks are repricing assets, tightening insurance markets and reshaping supply chains, and no legislative amendment changes that.

If you are seeking insights into climate risk services, keep an eye on our research portal for our upcoming report, Smart Innovators: Physical And Transition Risk Services.