Fund Managers Urge Delay on Emissions Data Audit Requirements

Highlights:

• Call for Delay: Fund managers, led by BIG Chair Simon Haines, propose delaying the audit requirement for emissions data by at least one year to align with Australian standards.
• Challenges with Data Assurance: Inconsistencies in third-party emissions data and speculative assumptions make accurate assurance difficult and potentially misleading.
• High Costs and Resource Shortages: The initial high costs of auditing, often passed on to customers, and the shortage of qualified practitioners are major concerns, complicating the reporting process.

Concerns Over Timing and Accuracy

Boutique Investment Group (BIG) Chair Simon Haines has called for a delay in the government's audit requirements for emissions data in fund climate reports. According to proposals submitted to Commerce Minister Andrew Bayly and Climate Minister Simon Watts, fund managers would continue to report emissions data without mandatory assurance and include a warning statement.

New Zealand's climate standards mandate auditing of greenhouse gas (GHG) emissions disclosures for reporting periods ending October 27, 2024, and beyond. However, based on the experiences of local fund managers, BIG argues for postponing this deadline by at least one year to align with Australian fund managers' schedules.

Challenges with Current Data and Assurance

Fund managers are not responsible for their own emissions but for the aggregate emissions of the companies and non-listed entities they invest in. They rely on third-party data providers, which often vary widely in data collection methods and disclosure levels globally. Haines highlights issues with inconsistent risk assessments and the potential for misleading assurance due to reliance on speculative assumptions, such as future carbon prices.

High Costs and Limited Resources

The initial costs of auditing are substantial, with some fund managers spending hundreds of thousands of dollars. These expenses are often passed on to customers. Additionally, the shortage of practitioners capable of handling the volume of reporting entities exacerbates delays and increases costs. Haines warns that New Zealand's stringent requirements may place it at odds with global standards and hinder the effectiveness of climate reporting.

Call for Global Synchronization

Haines emphasizes that while New Zealand aims to lead in climate reporting, it should avoid moving too far ahead of other jurisdictions. The letter from BIG, supported by numerous signatories including Aurora Capital, Booster, and Fisher Funds, suggests that the current audit requirements may be costly and challenging to meet without offering substantial benefits for clients or the environment.

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