FMA flags gaps, guidance in climate risk reporting
The Financial Markets Authority (FMA) has released its 2025 review of climate-related disclosures (CRD), providing feedback to climate reporting entities (CREs) on improving the quality of their climate statements.
Purpose and scope of the reviews
FMA’s 2025 review focused on CRD compliance, identifying areas for improvement, and providing feedback to help climate reporting entities (CREs) enhance future disclosures.
The 2025 insights cover 109 climate statements for reporting periods ending between Dec. 31, 2023, and Nov. 30, 2024.
Wide variance in disclosure quality
FMA noted a wide spectrum in the quality of climate statements, ranging from high quality with minimal findings to statements with multiple areas for improvement.
Examples of higher-quality disclosures included:
- Clear tables, sections, and appendices to make complex information understandable
- Transparent greenhouse gas (GHG) emissions targets with context on offsets and timeframes
- Integration of climate risk identification within overall risk management processes
The regulator also flagged recurring weaknesses, such as vague disclosures, omissions of material information, and risks described at sector-level without linking them to the entity.
Climate-related risks and opportunities in focus
A key emphasis in this year’s review was the identification and assessment of climate-related risks and opportunities (CRROs).
Gaps included:
- Non-specific risk and opportunity disclosures with limited context
- Missing time horizons for short, medium, or long-term risk assessments
- Use of climate model averages only, which can obscure material risks like droughts or extreme rainfall scenarios
FMA encouraged CREs to evaluate their methods and scenario analysis to ensure they capture material risks and opportunities effectively.
Common misconceptions about the CRD regime
FMA reiterated that the CRD regime is a disclosure framework, not a mandate for business action.
Other clarifications include:
- Having a transition plan is not mandatory, though disclosure of relevant strategy aspects is required
- CREs can meet transition plan disclosure requirements without a standalone plan if key elements (targets and actions) are already embedded in their strategy
- Cross-referenced information in climate statements carries the same responsibility as directly disclosed information and must comply with climate standards
Year two and future monitoring
FMA’s second year of monitoring will maintain an educative and constructive approach but may request underlying records where significant issues are identified.
Four key focus areas for 2025–2026 reviews include:
- Addressing prior feedback and improving disclosures over time
- Disclosing all material climate-related risks and opportunities
- Complying with requirements no longer under adoption relief, such as transition plan aspects and financial impact disclosures
- Obtaining independent assurance over GHG emissions disclosures
FMA will also provide more verbal feedback to CREs, particularly those with December and March year-ends, to help them adjust before their third reporting year.
“Our objective is to enhance the quality of climate-related disclosures,” it said. “We expect CREs to improve their disclosures over time, including addressing any relevant feedback we have provided.”
What this means for mortgage and finance professionals
For lenders, brokers, and institutional investors, enhanced CRD reporting:
- Improves transparency of borrower climate risk exposures
- Supports risk-based decision making for lending and investment
- Mitigates greenwashing risks as assurance and regulatory scrutiny increase
FMA will release its next monitoring report in mid-2026, reflecting its third year of reviews, and expects the CRD regime to reach a “steady state” by 2026.
Access the full FMA report for more information.
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