Meridian Energy : submission - Climate-related Disclosure Framework Consultation - September 2022

23 September 2022

Climate-related Disclosure Framework Consultation

External Reporting Board

By email: [e-mail]

Climate-related Disclosure Framework

Meridian welcomes the opportunity to comment on the Climate-related Disclosure Framework (CRDF) consultation document for, Aotearoa New Zealand Climate Standards. Responses to the XRB's specific consultation questions are included in Appendix A of this submission.

Meridian broadly supports the proposed Climate-Related Disclosure Framework

Meridian considers the Exposure Draft (ED) Aotearoa New Zealand Climate Standards 1, 2 and 3 to be generally concise and clear, setting clear expectations. The comparison tables provided to illustrate the any differences between the potential NZ CRDF, the International Sustainability Standards Board (ISSB) proposals and the Task Force on Climate-related Financial Disclosures (TCFD) guidance are helpful to concisely highlight any differences, and the rationale for that.

We acknowledge the materiality approach proposed and suggest there is room for NZX 'material information disclosure' alignment

Meridian previously submitted that it would be helpful to have a definition of material information that aligned with NZX requirements on 'material information disclosure'. NZX continuous disclosure rules require listed companies to publicly report material information that "a reasonable person would expect, if it were generally available to the market, to have a material effect on the price of quoted financial products of the listed issuer…". We note the

Meridian Energy Limited	293-297 Durham St North	Phone [phone]
	P O Box 2128 Christchurch	www.meridianenergy.co.nz
	Christchurch	New Zealand

XRB is proposing that "Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that primary users make…". A better aligned definition would be that "Information is material if a reasonable person would expect that omitting, misstating or obscuring it would have a material effect on the decisions of primary users …" The effect may be broadly the same in either case. However, alignment will help to streamline implementation for businesses that are familiar with NZX continuous disclosure obligations and will mean that NZX guidance on interpretation of materiality may be of use. Meridian asks the XRB to reconsider its description of materiality.

We suggest some further clarification on scenarios

Meridian supports the inclusion of specific 1.5 and >3 deg C scenarios. We acknowledge the XRB's rationale to "add a requirement to explore a third scenario to avoid two scenarios being seen as opposites or 'good and bad'", but don't share the concern that there is a need for further mitigation on 'good or bad' interpretations. If the definition of a scenario, and its purpose, is clear, we believe this should be sufficient. Our concern relates to the nature of an undefined 'other' scenario, in that it might not aid with comparability across industry. If a third scenario is required for a definite purpose, we believe there could be value to define the parameters of that. For example, a "no change / BAU" scenario could be used to measure the potential depth of changes, or a ">4.5 deg C" scenario to explore the impacts of catastrophic climate change impacts. We believe some further clarity on what defined purpose a third scenario is intended to serve, would aid with the principle of comparability.

Any integration of anticipated climate-related impacts into financial statements will require care noting the uncertainty prevalent in longer term anticipated impacts

Meridian is supportive of the requirement to disclose anticipated financial impacts of climate- related risks and opportunities reasonably expected, balanced with disclosure also on sources and degrees of uncertainty with longer term anticipated impacts. Meridian notes the XRB's intent to provide guidance on the integration of financial impacts with financial statements and would welcome the opportunity to engage with the XRB in the development of any guidance. The representation of more certain, short-term information, typically included in financial statements, with a potential expectation that significantly more uncertain and longer-term anticipated financial impacts be integrated - will be a matter to work through with care to ensure primary users have clear and concise information available.

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Meridian Submission - XRB Climate-related Disclosure Framework Consultation - September 2022

Conclusion

Meridian is highly supportive of mandatory Climate-Related Disclosures and looks forward to aligning our processes and future disclosures with the final Aotearoa New Zealand Climate Standards. We would like to commend the XRB for leading this consultation in a clear and engaged manner.

Nāku noa, nā

Tina Frew

Head of Sustainability

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Meridian Submission - XRB Climate-related Disclosure Framework Consultation - September 2022

Appendix A: Responses to consultation questions

Question	Response

1 Do you think draft Aotearoa New Zealand Climate Yes

Standards will meet primary user needs?

a. Do you think that the proposed disclosure	We expect it will take time for maturity and consistency in the application of the CRDF
requirements will provide information that is useful	to be established, and therefore, the degree to which the information is useful for
to primary users for decision making? If not, please	primary users' decision making, will also increase over time. In service of 'start by
explain why not and identify any alternative	starting', Meridian supports the draft Aotearoa New Zealand Climate Standards.
proposals.
b. Do you consider that draft Aotearoa New Zealand	Overall, yes.
Climate Standards are clear and unambiguous in
terms of the information to be disclosed? If not, how	Some feedback on NZ CS 3 principles:
could clarity be improved?	• Table 1 - Accuracy - the qualification that "…in this context, accuracy does not mean
	certainty of outcome. Estimates should be presented with a clear emphasis on their
	possible limitation and related uncertainty". Given the inherent, and potentially
	significant degree of uncertainty that is possible in the potential financial impact of
	climate-related risks and opportunities for example, Meridian strongly supports
	inclusion of the accuracy principle's explanation in the context of CRD.
	• Table 1 - Consistency - Meridian agrees that consistency in approach or method
	across reporting periods would be useful to a primary user. There are possible
	scenarios where sound logic exists to evolve and/or change methodologies. For the
	metrics and targets used to track and assess climate-related risks and opportunities
	could evolved significantly over time. It could be pragmatic to include an additional
	note in the 'explanation in the context of CRD' that "However, in this context
	consistency does not mean new approaches or methods cannot be adopted where
	emerging best practice supports change, and that rationale is disclosed".
	• Table 2 - Consistency - Meridian also sees a case to potentially rename the
	'consistency' principle in table 2, to mitigate potential confusion with the same
	principle title in table 1, acknowledging the two different descriptions of intent and
	context. A possible option would be to change the Presentation principal of
	'consistency' to 'Format consistency'.

Meridian Energy Limited	293-297 Durham St North	Phone [phone]
	P O Box 2128 Christchurch	www.meridianenergy.co.nz
	Christchurch	New Zealand

		It is also useful that different acceptable options have been highlighted in the standards
		for the avoidance of doubt i.e., NZ CS 3 paragraph 13 "An entity may provide its climate-
		related disclosures in a standalone document or within another document".
		Regarding NZ CS 1, cross-industry metric categories - it could be useful to add a
		qualifier in sub paragraphs 21 (c) - (f) that the amount / percent to references apply to
		'identified' or 'disclosed' (climate-related) risks and opportunities.
	c. Do you consider that draft Aotearoa New Zealand	Largely, yes.
	Climate Standards are comprehensive enough and
	achieve the right balance between prescriptiveness	As outlined in our covering letter, Meridian supports the inclusion of specific 1.5 and >3
	and principles-based disclosures? If not, what	deg C scenario. We acknowledge the XRBs rationale to "add a requirement to explore
	should be removed or added to achieve a better	a third scenario to avoid two scenarios being seen as opposites or 'good and bad'", but
	balance? Please consider your answer to question 5	don't share the concern that there is a need for further mitigation on 'good or bad'
	interpretations. If the definition of a scenario, and its purpose, is clear, we believe this
	when responding to this question.	should be sufficient.
		If a third scenario is mandated, we believe there could be value to define the parameters
		of that. For example, a "no change / BAU" scenario could be used to measure the
		potential depth of changes, or a ">4.5 deg C" scenario to explore the impacts of
		catastrophic climate change impacts. We believe some further clarity on a third
		scenario, would aid with the principle of comparability.
2	Do you have any views on the defined terms in draft	Generally supportive of the terms as defined. However, Meridian considers there to be
	Aotearoa New Zealand Climate Standards?	some merit in reconsidering the description of material information as outlined in our
	cover letter here.
3	Do you have any practical concerns about the feasibility	Meridian has no concerns about the feasibility of preparing the required disclosures and
	of preparing the required disclosures in draft Aotearoa	notes the pragmatic expectation that there will be learnings and transition time needed
	New Zealand Climate Standards? In responding to this	for many reporting entities to grow capability over time, and that this in turn, will have
	question, please consider the proposed first-time	some short-medium term impact on the usefulness of information for primary users as
	this capability establishes itself more broadly in the market.
	adoption provisions in NZ CS 2 and your answer to
	question 4. Please also clearly explain what would make
	the specific disclosure unfeasible to disclose against
	either in the immediate term or the longer term.
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Meridian Submission - XRB Climate-related Disclosure Framework Consultation - September 2022