Coasties might think that mandatory climate-related disclosures would lead to better environmental performance by businesses, but a new study suggests otherwise.

This year, New Zealand joined a global movement by requiring its largest companies and financial institutions to include climate risk and opportunity reports in their annual filings.

This initiative, overseen by the Financial Markets Authority, aims to enhance transparency about climate-related practices.

However, a study co-authored by Professor Charl de Villiers from the University of Auckland's Business School reveals that such mandates may not always translate into improved environmental outcomes.

The research examined the impact of the EU’s Directive 2014/95/EU, which, similar to New Zealand's new regulations, requires extensive reporting on environmental and social issues.

Despite these requirements, the study found no significant improvement in the environmental and social performance of European companies, nor did they outperform their US counterparts in these areas.

“It’s crucial that we don’t assume that simply mandating disclosure will lead to better environmental practices,” de Villiers stated.

The study suggests that without detailed guidelines, rigorous auditing, and stringent penalties for non-compliance, such regulatory measures might fall short of their intended impact.

As New Zealand’s Financial Markets Authority prepares to adopt a broadly educative approach initially, it may start enforcing stricter measures by 2026 to ensure meaningful progress.