Kiwis value accountability. In our recent brand research, we found that 81% of New Zealanders believe businesses should consider people and planet in their decision-making, while 88% expect directors and CEOs to be held responsible for their social and environmental performance.
The government has a role to play in setting clear expectations, and ensuring accountability from businesses in today’s world. But business and government need to work together to make sure this is done in a way that drives real change – without unnecessary bureaucracy. The right balance between ambition and practicality is key to making climate action both effective and achievable in Aotearoa.
So how do Government and business ensure accountability drives real progress – without the extra red tape? How do we encourage businesses to reduce their climate footprint while making sure they take responsibility for their impact transparently? And what additional support is needed to help businesses move beyond the basics and create meaningful economic change?
These are some of the critical questions B Lab Australia & Aotearoa New Zealand (B Lab AANZ) has tackled in our submission to the Ministry of Business, Innovation and Employment (MBIE)’s Adjustments to the Climate-Related Disclosures Regime consultation, which closed on 14 February 2025.
Photo (edited) by Bahtiar Maulana on iStock
About the Adjustments to the Climate-Related Disclosures Regime consultation:
New Zealand’s climate-related disclosures (CRD) regime, introduced in 2021, marked a step forward in corporate accountability on climate impact. Designed to ensure that businesses consider and disclose climate risks, the regime applies to publicly listed issuers, registered banks, licensed insurers, credit unions, building societies, and fund managers exceeding certain thresholds. However, as the first round of disclosures rolled out in early 2024, concerns emerged around the framework’s effectiveness, cost, and unintended consequences. This conversation is playing out on similar regimes across the world, with the EU Omnibus proposal signalling a significant weakening of their sustainability laws just last week.
B Lab AANZ is actively engaging in this discussion in Aotearoa, with a submission to MBIE that focuses on:
- Evaluating how director liability should be structured to maintain corporate accountability without exposure to excessive legal risk; and
- The support businesses need to keep raising the bar on sustainability.
Read on to learn more about our position.
1. How much liability is needed for accountability?
Section 534 of the Financial Markets Conduct Act 2013 (FMC Act) establishes that if a climate reporting entity contravenes certain climate-related disclosure obligations, all directors of the entity are deemed to have also personally contravened these requirements. This means directors can be held personally liable for the entity’s failure to comply with reporting standards.
In our submission, we stated our support for amending the legislation so that personal liability no longer applies to climate-related disclosures.
At first glance, strict liability settings may seem to be the most likely to drive compliance and ensure accurate, transparent reporting. However, conversations with B Corp leaders and sustainability experts painted a different picture:
“We are getting the wrong type of board engagement. The attention is on protection and exposure, not progress and preparedness,” said one B Corp.
Another reported, “We used to be innovators in this space, but over the last five years, there has been so much focus on compliance and risk that we have had to act much more conservatively.”
The reality is that accountability is not the same as liability. Personal responsibility may be one way to get directors’ attention, but businesses can be held to account in multiple ways – by consumers, investors, and employees – without the risk of excessive personal or criminal liability.
Strict liability settings can also deter bold leadership and transparency, leading to ‘greenhushing’ – where companies avoid sharing sustainability progress for fear of legal repercussions. Instead of encouraging genuine transparency, excessive liability can discourage businesses from setting ambitious public targets. Businesses need a framework that prioritises transparency and progress while acknowledging the complexities of sustainability commitments.
“The goal should always be to deliver real impact, not just box-ticking. When businesses operate in fear of excessive liability, they can become more concerned with mitigating legal risk than making the bold moves necessary to drive meaningful change. That said, where there is misleading or deceptive conduct, we fully support that liability should still apply.”
— Andrew Davies, CEO of B Lab AANZ
2. Raising the bar: Going beyond basics
For businesses to drive real climate action, transparency alone isn’t enough. While disclosure frameworks help set a baseline, meaningful progress comes from measurement, management, and continuous improvement. B Lab AANZ strongly encourages the Government to pursue alternative methods that complement the liability settings to incentivise action and progress on climate targets.
a) We support the introduction of publicly available data and tools to drive more accountability:
When companies share data with the public (and they can compare themselves to their peers), it holds them accountable – and sparks progress.
Take Australia’s gender pay gap reporting, for example. When businesses had to start publicly sharing their numbers, it led to more action, better policies, and a drop in the gender pay gap from 28.6% to 21.8% over the past decade.
“This same principle applies to B Corps who use the B Impact Assessment to benchmark their impact, with most improving their scores over time. It’s proof that when businesses have the right tracking tools, they step up.”
— Andrew Davies, CEO of B Lab AANZ
b) We urge the Government to support frameworks that help businesses move beyond disclosure and into meaningful action.
Encouraging voluntary measurement and reporting beyond the CRD requirements can build internal confidence, raise industry standards, and offer a competitive edge to investors.
That’s why B Lab AANZ partnered with New Zealand Trade & Enterprise to run Business for Good – a six-week programme designed to help businesses not just track their social and environmental impact, but actively improve it, using the B Impact Assessment framework.
We call on the Government to support and expand initiatives like this, ensuring more businesses are equipped to make real progress.
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Policy and progress go hand in hand. Progress drives demand for better policies, and strong policies enable continued progress. To realise effective and urgent climate action, it’s important that policies are designed to balance ambition with achievability.
When policy and progress evolve together, businesses are held accountable, meet higher standards, and are empowered to drive meaningful change.
Want to dive a little deeper? Have a listen to our B Lab Forces For Good Podcast – Episode 3: Which comes first – policy or progress?
