NZX to require companies to now include non-financial reporting

NZX Corporate Governance Code 2017,

Recommendation 4.3

The relevant paragraph (page 20) in the link here https://nzx.com/files/static/cms-documents//NZX_Corporate_Governance_Code_2017.pdf

Non-financial reporting

As a step towards long term value creation, an issuer should determine the appropriate level of non financial reporting to form part of its disclosure regime. While this non-financial reporting should include consideration of material environmental, social and governance (ESG) factors and practices, it could also include other non-financial disclosure, such as a description of the performance of the issuer’s business against its strategic objectives. Companies should communicate a balanced and understandable assessment of the company’s performance, business model, strategic objectives and progress against meeting them.

The Sustainable Stock Exchange Initiative recognises reporting frameworks for ESG policies and practices and it is now commonplace for stock-exchanges world-wide to provide guidance to issuers for reporting on ESG. This form of reporting is also referred to as sustainability reporting or by similar names.

In order for investors and other users of this information to be able to easily compare information, NZX suggests that if an issuer chooses a formal framework to report on ESG factors, it should report against a recognised international reporting initiative such as the Global Reporting Initiative guidelines or Integrated Reporting which can be found here.

There should be balanced, transparent, public disclosure which connects financial, social and environmental performance. This should explain how ESG factors affect the financial performance of an issuer, allowing stakeholders to have a better understanding of the issuer’s overall performance, risks and opportunities. Smaller issuers may consider that it is not appropriate to adopt a formal ESG framework and may instead select non financial matters they choose to report upon.