Capital Markets Reforms

We are seeking feedback on ways to create efficient capital markets to provide capital for New Zealand businesses to invest and grow. This includes exploring changes to the climate-related disclosures regime and KiwiSaver settings.

This consultation is the first phase of the reform package.

The climate-related disclosures regime requires certain entities to prepare annual climate statements in accordance with standards issued by the External Reporting Board. Entities must report if they meet certain size thresholds as set out in the Financial Markets Conduct Act 2013. 

The first year of reporting has highlighted some issues with the climate-related disclosures regime which may be negatively impacting New Zealand businesses. As a result, the Government is considering making adjustments to the regime to ensure the settings are appropriate and proportionate for the New Zealand context. 

The discussion document explores options to address these concerns by considering: 

• potential adjustments to the director liability settings to reduce, but not remove, the potential liability of directors for what is reported in climate statements
• potential adjustments to the listed issuer and investment scheme manager reporting thresholds 
• whether there would be value in encouraging subsidiaries of multinational corporations to file their parent company climate statements in New Zealand.

While these adjustments are not intended to be a wholesale review, the Government is interested in feedback on making legislative changes within the current framework of the regime. 

The External Reporting Board have produced an explainer about differential reporting in reference to this discussion document:

Differential climate-related reporting [PDF 556KB](external link) – External Reporting Board

Money held by KiwiSaver providers in the KiwiSaver accounts of their members is invested in financial markets to get higher returns over time for members. Currently most of the funds held in these accounts are invested in ‘public’ assets — for example shares or bonds that are listed and traded on stock exchanges in New Zealand and around the world.

KiwiSaver investment in private assets is low. Private assets are those that are not listed publicly on a stock exchange. Private assets could include unlisted infrastructure (e.g. transport projects, or renewable energy developments) and strong, growing New Zealand businesses that are not listed on any stock exchanges. 

We are considering some changes to regulations that would make it easier for KiwiSaver providers to invest some of the funds they manage into private assets. Investment in private assets could have significant benefits for both KiwiSaver members and the New Zealand economy. Members would get a wider range of investments in their KiwiSaver funds, which can lower the risks associated with investment, as well as potentially bring better returns over time. Investing some of the funds currently in KiwiSaver into different types of assets could also help provide money for leading New Zealand businesses looking to grow and help fund infrastructure projects to support our economy, which would help create jobs and lift standards of living.

The proposals in the Discussion Document include clarifying the use of specific risk management tools, ensuring valuation requirements are appropriate for private assets, improving public information around KiwiSaver investment in private assets, and considering the current way fees (which can be higher for private assets) are calculated and reported.