Environmental, Social and 
Governance  
NZX Guidance Note  
 
 
 
 
 
11 December 2017

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
2 of 19 
Contents 
Contents .......................................................................................................................... 2 
1. 
Introduction ............................................................................................................. 3 
2. 
Background – What is ESG? ................................................................................... 4 
3. 
How is ESG relevant to my company? .................................................................... 5 
4. 
Our Global Commitments ........................................................................................ 7 
5. 
What are the available global frameworks in New Zealand? ................................... 9 
6. 
What should be reported? .....................................................................................10 
7. 
How to approach reporting on ESG.......................................................................11 
8. 
Reporting formats and regulation ..........................................................................13 
9. 
Communication with shareholders ........................................................................14 
10. Green Bonds .........................................................................................................15 
11. Further Resources.................................................................................................17

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
3 of 19 
1. Introduction 
 
In 2017, NZX released the NZX Corporate Governance Code (the Code)1 for issuers to report 
against under the NZX Main Board Rules. The overarching purpose of Code is to promote good 
corporate governance, recognising that boards are in place to protect the interests of 
shareholders and to provide long-term value. It operates on a ‘comply or explain’ basis.  The 
Code is structured around 8 principles that cover a code of ethics, board composition and 
performance, board committees, reporting and disclosure, remuneration, risk management, 
auditors and shareholders rights and relations.  
One of the key aims of the Code is to promote issuer disclosure of environmental, social and 
governance factors (ESG). In particular, recommendation 4.3 states:  
“Financial reporting should be balanced, clear and objective. An issuer should provide 
non-financial disclosure at least annually, including considering material exposure to 
environmental, economic and social sustainability risks and other key risks. It should 
explain how it plans to manage those risks and how operational or non-financial targets 
are measured.” 
Issuers may include other non-financial information, such as a description of the performance of 
an issuer’s business against strategic goals. Non-financial reporting is new under the NZX 
Corporate Governance Code. An explanation of the “comply or explain” nature of the NZX Code 
is included on page 5 of the NZX Code. 
Aims of this Guidance Note 
This guidance note is for NZX listed issuers that are considering the disclosure of ESG factors 
under the NZX Code. It is built on the understanding that most businesses will have some sort 
of interaction with one or more of the branches of ESG. While not exhaustive, this guidance 
note aims to help issuers better understand the benefits of ESG reporting and the global 
reporting regimes available.  
The NZX ESG Guidance Note aims to: 
• 
explain what ESG is; 
• 
provide issuers context on why it is important (i.e. its relevance under the NZX Code and 
investor demand);  
• 
provide issuers with resources for accessing more information about how to report on 
ESG factors, including which global frameworks are available to them; and  
• 
help issuers communicate their strategies for identifying and managing their materially 
significant ESG opportunities and risks to stakeholders and investors. 
 
1 https://www.nzx.com/regulation/nzx-rules-guidance/corporate-governance-code

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
4 of 19 
This guidance should help issuers identify the most appropriate global framework against which 
to report of the most widely recognised and used in New Zealand. The global frameworks 
identified are not exhaustive and NZX recognizes that other frameworks not discussed here 
may also exist, or be developed or evolve over time.  
2. Background – What is ESG?  
 
The use of ESG disclosure is becoming more important in relation to investment decisions 
alongside other financial and strategic information. Issuers can show investors that they are 
equipped for the long term, and are ready to respond to risks and take advantages of 
opportunities. 
There are three elements that help socially conscious businesses measure their sustainability 
and the ethical impact of an investment in their company or business. These are: 
• 
Environmental criteria (looks at how a company performs as a steward of the natural 
environment); 
• 
Social criteria (considers how a company manages its relationships with stakeholders 
(i.e. employees, impact on the broader community and/or suppliers));  
• 
Governance (includes a company’s leadership, executive pay and shareholder rights 
amongst other matters).  
FTSE Russell has drawn from global standards and frameworks in the development of its ESG 
model. The model involves producing an overall ESG Rating based on the three pillars of 
Environment, Social and Governance and on 14 Themes adapted to reflect their materiality to 
businesses. The table below provides examples of ESG issues for guidance purposes. 
A definitive list of ESG issues does not exist. It would not be possible or desirable to produce a 
list or set of definitions that claim to be definitive because it would soon go out of date. Some 
branches of ESG are sector specific and a listed issuer should take a holistic view of how their 
business fits, noting there are two parts to the equation – the impact a business has on the 
environment and the impact the environment has on a business. ESG reporting requires a 
business to consider both. 
ESG Reporting Factors 
1. Environmental 
 
2. Social 
3. Governance  
 
Biodiversity 
 
Climate change 
 
Pollution and 
resources 
 
Water use 
 
Labour Standards 
 
Human rights and 
community 
 
Health & Safety 
 
Customer Responsibility 
 
Anti-corruption 
 
Corporate Governance 
 
Risk Management 
 
Tax Transparency

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
5 of 19 
The UN PRI cites a more comprehensive list: 
1. Specific Environmental 
Issues 
 
2. Specific Social Issues 
3. Governance  
 
Environmental protection 
 
Air and water pollution 
 
Waste management 
 
Land degradation 
 
Resource depletion 
 
Sustainable procurement 
 
Deforestation 
 
Biodiversity 
 
Ecosystem services 
 
Human rights 
 
Supply chain management 
 
Conflict regions 
 
Labour standards 
 
Human capital management 
 
Talent attraction and 
retention 
 
Access to medicines 
 
Safe development of 
medicines 
 
Government and community 
relations 
 
Product safety and liability 
 
Product mis-selling 
 
 
Executive 
remuneration 
 
Bribery and corruption 
 
Shareholder rights 
 
Proxy voting 
 
Business ethics 
 
Board composition 
 
Independent directors 
 
Risk management 
 
Whistle-blower 
schemes 
 
Stakeholder dialogue 
 
Lobbying 
 
Government relations 
 
Disclosure 
 
Capital reorganizations 
 
Accounting treatment 
 
Succession planning 
 
Audit committee 
structure 
 
Interchanging terminology (ESG, sustainability, integrated-reporting, non-financial Reporting or 
Corporate Social Responsibility?)  
Often, the terms ESG, non-financial reporting and corporate social responsibility are used 
interchangeably. For the purposes of this note, we have elected to use the term ESG because it 
is a commonly used term. 
 
3. How is ESG relevant to my company?  
 
There are many reasons why ESG is relevant to corporate governance. Three of these are 
identified briefly below: 
1. A changing global environment 
All over the world, companies and entities are coming to report on ESG and responsible 
investment. These trends reflect the need to shift to a low carbon economy, increasing business 
vulnerability to the effects of climate change and other environmental and social factors, a 
generational changeover and institutional forces. The major move towards investment in these 
areas worldwide includes: 
• 
signatories to the UN Principles of Responsible Investment (UN PRI) now represent $60tn 
in assets under management – up from $22tn in 2010.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
6 of 19 
• 
recent research from Global Sustainable Investment Alliance suggesting that sustainable 
investing strategies now represent more than 60% of professionally managed assets for EU 
investors. 
• 
a recent Barclays study also found that investment-grade bonds with higher ESG scores 
outperformed those with lower ESG scores between 2007 and 2015.2 
• 
responsible investments have more than quadrupled over the past 3 years in Australia to 
$622 billion in assets under management in 2016 with nearly half (44%) of Australia’s 
assets under management now being invested through some form of responsible 
investment strategy.3 
• 
responsible investment funds are largely outperforming their average mainstream 
counterparts year on year as the market for responsible investment grows in Australia.4 
The global context of this movement is discussed more in para 4 ‘Our Global Commitments’. 
2. Increasing investor interest 
Investor decision making is key to ESG reporting. Climate change and depletion of resources 
mean investors, particularly younger ones, may consider sustainability as an important factor 
when making investment choices. Evidence based disclosure can help investors make 
conscious investment choices. Commentary indicates that more investors are asking questions 
about corporate responsibility and looking for evidence based answers when choosing where to 
invest.  
When communicating to investors and stakeholders about long-term issues associated with 
ESG, particularly environmental issues, issuers should be able to express where their 
organization sits on the spectrum of companies with an ESG footprint and what, if anything, is 
being done to mitigate their impact. The purpose of this is to provide investors with a clearer 
picture of the issuer and its business. 
3. Informs the over-arching long-term strategic view of business 
ESG reporting aids already existing disclosures by issuers so that investors have a richer view 
into the long-term strategy of the issuer. Issuers should think about the current and future 
strategy for their company, and how ESG fits into this. There is no one-size-fits-all approach for 
ESG reporting and depending on the nature of its business, some issuers may find certain 
areas of ESG more relevant than others. However, climate, population and customer 
demographic and technology changes are all important overarching themes to consider for ESG 
reporting and issuers are encouraged to use the range of tools available to them to think about 
the impact of their business broadly and critically.  
 
2 Source – Barclays: https://www.investmentbank.barclays.com/content/dam/barclaysmicrosites/ibpublic/documents/our-insights/esg/barclays-
sustainable-investing-and-bond-returns-3.6mb.pdf 
3 Source – Responsible Investment Association Australia: Responsible Investment Benchmark Report 2017 Australia  
4 As above.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
7 of 19 
4. Our Global Commitments 
 
Sustainable Stock Exchange Initiative and NZX 
In 2016 the Sustainable Stock Exchange invited NZX to become a Partner Exchange of the 
SSE by making a voluntary public commitment to promote ESG disclosure and performance 
among issuers. The SSE initiative is organised by the UN Conference on Trade and 
Development (UNCTAD), the UN Global Compact, the UN Environmental Program Finance 
Initiative (UNEP FI) and the UN PRI to promote transparency on ESG issues by exchanges.  
As a member of the SSE NZX promotes disclosure of relevant ESG matters by issuers. In order 
to achieve New Zealand’s environmental and sustainability goals, the New Zealand 
Government is re-examining its own opportunities and challenges of a transition to a lower net 
emissions economy.5 The focus on this work indicates that ‘green’ reporting and finance and 
disclosure is becoming mainstream.   
UN Sustainable Development Goals  
New Zealand is party to the UN Sustainable Development Goals. In September 2015, the 
United Nations signed up to 17 Sustainable Development Goals (SDGs) and 169 targets. 
The Human Rights Commission specifically noted this as a point in its submission to NZX on 
the NZX Code stating that “ESG Reporting is a way that our national exchange, NZX, and listed 
issuers can contribute to the UN Sustainable Development Goals.” 
The 17 goals and 169 targets set out a universal agenda to achieve sustainable development 
globally, to be achieved by 2030. They bring together the three dimensions of sustainable 
development: economic, social and environmental. They apply to all countries. Although the 
goals are not legally binding, countries are expected to report voluntarily on implementation. 
Best practice corporate responsibility reports link their strategy for managing ESG to the 
Sustainable Development Goals. 
The Paris Agreement  
On 12 December 2015 the new global agreement on climate change, The Paris Agreement, 
was adopted by Parties under the United Nations Framework Convention on Climate Change 
(UNFCCC), including New Zealand.  It entered into force in New Zealand on 4 November 2016 
and will take effect from 2020. The aim of The Paris Agreement is to keep global temperatures 
under 2 degrees above pre-industrial levels and to pursue efforts to limit the temperature 
increase even further.  
 
5 In April 2017, the current Minister of Finance shared the Terms of Reference for a Productivity Commission Inquiry into the Opportunities and 
Challenges to a Lower Net Emissions Economy for New Zealand. The purpose of this Commission of Inquiry is to identify options how New Zealand 
could reduce its domestic greenhouse gas emissions through a transition towards a lower net emissions future, while at the same time continuing to 
grow incomes and wellbeing.  
The outgoing Environmental Commissioner in her final address during July 2017 asked New Zealand’s political parties to unite on the common goal of 
finding a solution to climate change and setting achievable carbon budgets. The United Kingdom approach to carbon reduction via carbon budgets was 
used as an example of carbon levels can be successfully reduced through collective strategic efforts.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
8 of 19 
The Financial Stability Board Taskforce on Climate Related Financial Disclosures 
The Financial Stability Board Taskforce on Climate Related Financial Disclosures (FSB-TCFD) 
was set up by the G20's Financial Stability Board to provide such a framework to improve the 
ability to assess and price climate-related risk and opportunities.  
In mid-2017 it published 
its final report outlining 
its recommendations. It 
structured its 
recommendations 
around four thematic 
areas that represent core 
elements of how 
organisations operate; 
governance, strategy, 
risk management and 
metrics and targets.  
In particular, FSB-TCFD recommend that organisations disclose the specific metrics and targets 
used to assess and manage relevant climate-related risks and opportunities where such 
information is material. It states in its final report: 
“Investors and other stakeholders need to understand how an organization measures 
and monitors its climate-related risks and opportunities. Access to the metrics and 
targets used by an organization allows investors and other stakeholders to better assess 
the organization’s potential risk-adjusted returns, ability to meet financial obligations, 
general exposure to climate-related issues, and progress in managing or adapting to 
those issues. They also provide a basis upon which investors and other stakeholders 
can compare organizations within a sector or industry.”  
They should do so by:  
(1) disclosing the metrics used by the organization to assess climate related risks and 
opportunities in line with its strategy and risk management process;  
(2) disclosing Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) 
emissions, and the related risks; 6  and  
(3) describe the targets used by the organization to manage climate-related risks and 
opportunities and performance against targets. 
For more information, the full report is available here.  
 
 
6 ‘Scope’ refers to greenhouse gas (ghg) emissions scope level. Scope 1 refers to all direct GHG emissions. Scope 2 refers to indirect GHG emissions 
from consumption of purchased electricity, heat, or steam. Scope 3 refers to other indirect emissions not covered in Scope 2 that occur in the value 
chain of the reporting company, including both upstream and downstream emissions. Scope 3 emissions could include: the extraction and production 
of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities (e.g. 
transmission and distribution losses), outsourced activities, and waste disposal. See page 63 of Final Report: Recommendations of the Task Force on 
Climate-related Fianncail Disclosures- https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-TCFD-Report-062817.pdf

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
9 of 19 
UN Human Rights and their Principles 
In 1948 New Zealand ratified the Universal Declaration on Human Rights. Since then, New 
Zealand has generally had a good track record in relation to human rights, linking to the ‘social’ 
branch of ESG. New Zealand has international obligations under a range of UN treaties to 
which it has ratified and specific legislation such as the Human Rights Act 1993 and the Bill of 
Rights Act 1990. The full scope of New Zealand’s relationship to human rights is beyond the 
scope of this guidance note. However, more information can be found on the website of the 
Human Rights commission here. There is an important link between ESG reporting and human 
rights because this is something issuers already likely comply with and can report on to improve 
New Zealand’s overall rating for the ‘social’ branch of ESG (or corporate reporting) when it is 
linked to the UN Human Rights Principles. This may help issuers appeal to international 
investors who are looking to invest funds in ethical, sustainable businesses with a good record 
of social responsibility. 
 
5. What are the available global frameworks in New 
Zealand? 
 
While there is no consensus on reporting standards globally, there are a range of global 
frameworks available for issuers to report against that are widely cited by investors. No one 
framework is preferred by NZX, but it may be issuers find a particular framework a better fit for 
their company. While the sheer number of standards, frameworks and data requirements can 
be overwhelming, it is important to consider your business and what model works best for your 
company. As a result, NZX has short-listed the global reporting frameworks down to three 
commonly used in Australia and New Zealand, based on consultation undertaken in developing 
this guidance.7  
Different data is required across the different reporting frameworks. Lack of standardization 
means data can be difficult to compare issuers. However, globally all listed issuers and the 
business community at large are working towards consensus on what constitutes relevant 
information for issuers. 
If none of the below frameworks are considered viable by an issuer, the issuer should still 
consider providing ESG information using guidance and the relevant framework as a guide. 
ESG reporting could be accompanied by an explanation regarding why a global framework is 
inappropriate for that issuer and any targets that the issuer has to implement a global 
framework over the longer term.  
 
 
 
7 We note that KPMG have found that GRI is the most popular reporting framework in Australasia, with Integrated Reporting gaining ground. The 
Global report from KPMG ‘The road ahead’ is available here and is a useful resource to understand the global context of corporate responsibility better: 
https://home.kpmg.com/content/dam/kpmg/campaigns/csr/pdf/CSR_Reporting_2017.pdf. A 2017 New Zealand Corporate Responsibility Survey 
Supplement is also available from KPMG: https://home.kpmg.com/content/dam/kpmg/nz/pdf/November/02261-Corporate-Sustainability-Report-2017-
Digital.pdf

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
10 of 19 
The Leading Global ESG Frameworks 
 
Global Reporting Initiative 
(GRI) 
Integrated Reporting. 
UN Global Compact 
(UNGC). 
GRI Sustainability Reporting 
Standards are the most widely used 
standards for reporting on ESG 
impacts globally, and have been 
developed over many years through 
multi-stakeholder contributions. GRI 
Standards aim to meet the 
information of all stakeholders, and 
modular structure supports both 
comprehensive reports and selected 
disclosures. 
www.globalreporting.org. 
The Integrated Reporting 
Framework helps companies to 
produce a concise, investor 
focused report that looks at an 
issuers performance and 
prospects through the lens of six 
‘capitals’ (financial, 
manufactured, human, natural, 
intellectual, social and 
relationship). This framework can 
be used in conjunction with other 
specific ESG frameworks. 
www.integratedreporting.org. 
The Global Compact requires 
companies to commit to a set of 
ten universal principles 
concerning human rights, labour, 
environment and anti-corruption. 
www.unglobalcompact.org. 
 
6. What should be reported?  
 
Issuers may wish to consider reporting as follows: 
1. Explain the relevance of environmental, social and governance factors to their business 
models and strategy. These factors should not be ‘bolt-on’ but an integrated component 
of business drivers and considerations.  
2. Explain how ESG issues may affect their business, e.g. through legislation, reputational 
damage, employee turnover, licence to operate, legal action or stakeholder 
relationships, and how these impacts may affect business strategy and financial and 
operational performance (also known as ‘value mapping’).  
3. Explain how they intend to access the new opportunities and revenue streams 
generated by green and socially beneficial products and services. In this context they 
should explain how their investments in innovation and R&D will drive future growth for 
the business. 
4. Identify the parts of the business that manufacture or provide goods, products and 
services delivering environmental solutions and supporting the transition to a low carbon 
economy; and break down and quantify the associated revenues.  
5. Provide data that is accurate, timely, aligned with their fiscal year and business 
ownership model, and based on consistent global standards to facilitate comparability. 
6. Recognise that reporting is just one part of the wider dialogue they have with their 
investors. ESG reporting, irrespective of the specific format, provides a basis for 
dialogue with investors and other key stakeholders but is not a replacement for it.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
11 of 19 
7. How to approach reporting on ESG 
 
Consider which framework of those available is most appropriate for your business and 
operations 
Issuers should define their business and reporting boundaries, taking into consideration the 
nature of their business, the geographical span of operations, subsidiaries, joint ventures and 
supply chain.  
Identifying Key Stakeholders 
Issuers should consider who their key stakeholders are and how their reporting or gathering of 
data may affect them or require their feedback. Stakeholders can include employees, 
customers, suppliers, distributors, community, unions, shareholders, investors and government.  
Identifying materiality for those Stakeholders 
There is no one method to correctly identify relevant, or material information. However, it is 
important that issuers gain an understanding of what is material and bring that information to the 
attention of investors and other stakeholders. For instance, investors may be interested in 
whether an issuer can successfully respond to a climate change risk or demonstrate future 
viability and resilience.  An example of this could be an energy company considering investing 
in wind generation. The company should articulate to its shareholders the investment case, the 
sources of investment risk and how practices and performance will be measured, looking at 
both qualitative and quantitative data and the likely business, environmental, social and broader 
economic outcomes.  
The International Accounting Standards Board8 defines ‘material’ as information that which 
could, if omitted or misstated, influence the economic decisions of readers relying on financial 
statements. ASX in their ESG guidance note defines material as: 
“ESG risks are material, where a reasonable person would consider the 
information to have an impact on a company’s valuation or the sustainability of 
its operations. The risk(s) could have an immediate or foreseeable impact on 
earnings, an impact on a balance sheet, or an impact on the sustainability of 
its operations”9  
Other guidance about ‘materiality’ can be found online at the following: 
 
KPMG published guidance in August 2017 explaining materiality in the context of the 
NZX Corporate Governance Code to help bridge the gap between what companies are 
currently doing and how to provide value to investors and stakeholders in relation to 
 
8 The International Accounting Standards Board IASB) is an independent, private-sector body that develops and approves International Financial 
Reporting Standards (IFRSs) 
9 http://www.asx.com.au/documents/asx-compliance/acsi-fsc-esg-reporting-guide-final-2015.pdf

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
12 of 19 
non-financial reporting: https://home.kpmg.com/nz/en/home/insights/2017/09/materiality-
assessment.html  
 
The International Integrated Reporting Council and International Federation of 
Accountants released the publication, ‘Materiality in Integrated Reporting’ which offers 
guidance  Federation of Accountants has released the publication, ‘Materiality in 
Integrated Reporting’ which offers guidance on Integrated Reporting, explains materiality 
and the corresponding materiality determination process in the context of integrated 
reporting. This is available at https://integratedreporting.org/resource/materiality-in-
integrated-reporting/. 
 
Materiality is explained in respect of GRI reporting here on the G4 website, here: 
https://g4.globalreporting.org/how-you-should-report/reporting-principles/principles-for-
defining-report-content/materiality/Pages/default.aspx 
Develop a strategy 
Issuers may develop a strategy to address the identified risks and opportunities for ESG. The 
Strategy should drive reporting, rather than reporting driving strategy.   
Identify indicators of ESG themes 
Issuers should look at specific practices, outputs, impacts and, where relevant, results in their 
business as indicators of how it is performing on its material ESG issues, and whether this is 
applicable to the whole business or just a specific area. These should be drawn from both 
qualitative and quantitative data.  
The challenge is to identify the most relevant indicators and the ESG global frameworks which 
are most relevant. There may be a combination; for example, GRI may be used as a specific 
subset standard within a broader framework such as Integrated Reporting. Some NZX Listed 
Issuers already do (using GRI and Integrated Reporting).  
A company should take into account its own sector to report on ESG. For instance, a company 
that has a strong reliance on employees, like a software company, might report on employee 
attrition in its KPI’s. An eco-tourism company, on the other hand, would likely need to include 
opportunities and risks in relation to sustainability and environmental impact, and how that 
relates to its financial return.  
Provide data 
Information for ESG reporting needs to be complete, consistent, reliable, comparable and clear. 
Data should provide evidence of any assertions made.  
The characteristics of Investment Grade Data include: 10 
 
10 See London Stock Exchange Guidance on ESG: 
https://www.lseg.com/sites/default/files/content/images/Green_Finance/ESG_Guidance_Report_LSEG.pdf

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
13 of 19 
 
Accuracy – deploy rigorous data collection systems 
 
Boundaries – align to the fiscal year and business ownership model 
 
Comparability and consistency – use consistent global standards to facilitate  
 
Data provision – provide raw as well as normalised data 
 
Timeliness – provide data to coincide with the annual reporting cycle 
 
External assurance – consider strengthening the credibility of data by having it assured 
 
Balance – provide an objective view, including both favourable and unfavourable 
information. 
In order to allow comparability between peers, it is preferable to use consistent global standards 
when reporting if this is possible for the issuer. Issuers should gather data in line with common 
practices and report in a similar manner to sector peers when possible.  
The method that the issuers selects to report should remain consistent year-to-year. If the 
circumstances of the issuer changes, or any underlying assumption changes in its business, an 
issuer should explain the change to its business in its annual reporting, explicitly referring to 
ESG. An issuer may want to communicate sooner if a controversy or incident has taken place. 
An issuer may consider it more appropriate to present information in a standalone sustainability 
report  
The issuer may consider making raw data available to allow investors to cross compare issuers 
should they wish. Issuers can also support data interpretation by providing contextual data (ie 
number of staff and contractors, turnover, countries in which they operate), normalized data (ie 
interpreting process around set targets) and explanations (ie narrating the data, particularly 
where it may have influenced performance either positively or negatively). 
Providing an objective view of results with external assurance 
An issuer may wish to strengthen credibility of its ESG data through external assurance. This 
can be conducted through the same process as financial reporting using qualified auditors. The 
manner in which external assurance was sought should be described. 
In addition, issuers should try and present favourable and unfavourable information clearly and 
in full. Efforts to obscure information may create mistrust. Commentary may be provided to 
guide more difficult subjects. 
8. Reporting formats  
 
How should the report be presented? 
 An ESG report should be presented either as part of the issuer’s corporate governance 
reporting, or included as an external link (including a short summary of the ESG report) which is 
easy to locate on the issuer website. This should make up part of the issuer’s wider Annual

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
14 of 19 
Report to ensure information is widely and readily available to issuers. Any reporting should be 
easy to find, understand and access. An issuer can also address ESG in a standalone report. 
Importance of making Integrated Reporting comprehensive 
An integrated report aims to offer investors a more rounded, concise and holistic insight into 
business performance and impact over the short, medium and long term. The integrated 
reporting framework developed by the International Integrated Reporting Council (IIRC) guides 
organisations that want to understand and articulate to investors how their interactions with 
financial, human, natural and other forms of ‘capital’ affect business prospects, and emphasises 
disclosure of better information rather than more information.  
Users of integrated reporting alone should note the potential impact of making current reports to 
investors more concise. Issuers should consider their own business model and the breadth of 
their investors’ interests before adopting integrated reporting. They may also wish to consider 
supplementing integrated reporting with further ESG information available on their website.  
9. Communication with shareholders 
 
Investors want to better understand how a company is positioned to deliver long term  
sustainable value. Shareholders increasingly wish to understand why an issuer has made 
certain decisions in respect of ESG risks and opportunities and how decisions have been made. 
Issuers should use corporate reporting as a tool to communicate long term strategy, material 
issues and the future social, environmental and economic outcomes being pursued through 
their current activities. More information about shareholder rights and relations can be found in 
Principle 8 of the NZX Code.  
Timeframes 
An appropriate time to provide ESG data is at the same time as providing your corporate 
governance reporting under the NZX Code as part of an Annual Report, although listed issuers 
may also wish to provide more regular disclosure. This is so that investors know when they can 
expect to receive updated information and for consistency with other reporting criteria. There 
are also the disclosure requirements if something that materially impacts the share value 
occurs.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
15 of 19 
10. 
Green Bonds  
 
Another element of green finance that complements transparent sustainability reporting is green 
financial products, such as green Exchange Traded Funds (ETFs) and green bonds. Globally, 
there is a growing international trend towards sustainable investment and investors who are 
more conscious of where they put their money (i.e. do not want to invest money in investments 
that may be considered unethical). Now, some listed issuers are beginning to issue green 
bonds in New Zealand. 
A green bond is a bond where proceeds are used to finance or refinance climate-friendly or 
environmental projects. The market has been in existence since 2008, and as at the end of 
2015 reached USD $41.8bn of labelled green bonds issued globally. In 2016 it was USD $81.6b 
and in 2017 to date has been USD $103.3b. The market is open to many types of issuers: 
Corporations, Governments and semi-government bodies, Financial Institutions and Asset 
Owners. As at the drafting of this guidance, NZX issuers are already invested in the creation of 
green bonds.  
Many exchanges worldwide have been involved in the promotion and accreditation of new 
products. NZX would like to support the development of green financial products, promoting 
transparency and potentially assisting with accreditation to help the market recognize which 
products are ‘green’.11 Other exchanges around the world, such as the London Stock Exchange 
and Singapore Stock Exchange, have taken this step to label green financial products. 
Issuers of green bonds could consider disclosing information about internal assurance 
processes or consider independent external assurance to provide investors with a greater 
degree of comfort over the integrity of information disclosed. 
How to issue a green bond 
There are two main options to certify a green bond. An issuer can either follow: 
(a) The Green Bond Principles; or 
(b) Climate Bond Initiative Standards 
The Green Bond Principles and the Climate Bond Initiative have established requirements that 
need to be met by green bonds. Both provide a framework for identifying and applying bond 
proceeds to a range of green projects and expenditures and view assurance as a key element 
in in unlocking the additional “ethical” value of a green bond assuring the long-term integrity of 
green bonds.12 
 
 
 
11 See question 13 on page 12 of a discussion paper dated 27 September 2017 here 
12 http://www.ey.com/nz/en/services/specialty-services/climate-change-and-sustainability-services/ey-lets-talk-sustainability-issue-3-bonds-green-
bonds

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
16 of 19 
The Green Bond Principles13 
The Green Bond Principles, updated as at June 2017, are voluntary process guidelines that 
recommend transparency and disclosure and promote integrity in the development of the green 
bond market by clarifying the approach for issuance of a green bond. The Principles are 
intended for broad use by the market. They provide issuers guidance on the key components 
involved in launching a credible green bond, aid investors by ensuring availability of information 
necessary to evaluate the environmental impact of their green bond investments and assist 
underwriters by moving the market towards standard disclosures which will facilitate 
transactions.14  The Green Bond Principles include, but are not limited to, consideration of 
investment in the following areas: 
• 
Renewable energy 
• 
Energy efficiency (including efficient buildings) 
• 
Pollution prevention and sustainable waste management 
• 
Sustainable land use (including sustainable forestry and agriculture) 
• 
Biodiversity conservation 
• 
Clean transportation 
• 
Sustainable water management (including clean and/or drinking water) 
• 
Climate change adaptation 
• 
Eco-products  
• 
Green buildings 
Climate Bond Initiative Standards15 
Climate Bonds Standard & Certification Scheme are already being used by NZX listed issuers 
to verify green bonds issued. The Climate Bonds standards is the requirements and eligibility 
criteria for Climate Bond Certification, based on the current version as published on the Climate 
Bonds Initiative website (https://www.climatebonds.net/standards).  
For issuers, the Climate Bonds Standard & Certification Scheme is a voluntary initiative, which 
allows them to clearly demonstrate to the market that their bond meets industry standards for 
climate integrity, management of proceeds, and transparency. The key difference from the 
Green Bond Principles are: 
 
13 https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/GreenBondsBrochure-JUNE2017.pdf 
14 https://www.icmagroup.org/Regulatory-Policy-and-Market-Practice/green-social-and-sustainability-bonds/green-bond-principles-gbp/ 
15 https://www.climatebonds.net/files/files/Climate%20Bonds%20Standard%20v2_1%20-%20January_2017(1).pdf

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
17 of 19 
• 
Green assets supported by the green bond are required to meet sector specific technical 
criteria and;  
• 
Issuers must obtain assurance over the green bond for the Climate Bonds Standard 
Board to certify the bond 
The Certification Scheme is made up of the overarching Climate Bonds Standard Version 2.1 
and a number of Sector Specific Criteria that provide detailed eligibility criteria for different 
sectors, such as: 
• 
Solar energy;  
• 
Wind energy; 
• 
Geothermal energy; 
• 
Low carbon buildings;  
• 
Low carbon transport;  
• 
Water; 
• 
Marine Energy;  
Land Use and Hydropower (under development)The requirements of the Climate Bonds 
Standard are separated into pre-issuance requirements, which need to be met for listed 
issuers seeking certification ahead of issuance, and post-issuance requirements, which 
need to be met by issuers seeking continued certification following the issuance of the bond. 
Technical Working Groups and Industry Working Groups provide the expertise for the 
development of these Sector-Specific Criteria which are approved by the Climate Bonds 
Standard Board. 
 
11. 
Further Resources 
 
More background about ESG can be found at the following: 
• 
NZX.com 
• 
Sustainable Stock Exchanges Initiative - The Sustainable Stock Exchanges (SSE) 
initiative is a peer-to-peer learning platform for exploring how exchanges (in 
collaboration with investors, regulators, and companies) can promote responsible 
investment for sustainable development - (www.sseinitiative.org) 
• 
The Sustainable Business Council - The Sustainable Business Council (SBC) is the New 
Zealand member of the World Business Council for Sustainable Development that 
advocates a better way of doing business, one which creates a sustainable future 
(http://www.sbc.org.nz).

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
18 of 19 
• 
United Nations Principles of Responsible Investment – The PRI is the world's leading 
proponent of responsible investment. It works to understand the investment implications 
of environmental, social and governance (ESG) factors and to support its international 
network of investor signatories in incorporating these factors into their investment and 
ownership decisions. The PRI acts in the long-term interests of its signatories, of the 
financial markets and economies in which they operate and ultimately of the 
environment and society as a whole - (https://www.unpri.org)  
• 
The International Integrated Reporting Council (IIRC) - The IIRC is a worldwide coalition 
with the mission to mainstream integrated thinking and reporting and to change the 
corporate reporting system so that Integrated Reporting becomes the global norm 
(https://integratedreporting.org).  
• 
UN Global Compact Guide To Sustainability -  Lays out five defining features of 
corporate sustainability, which the Global Compact asks businesses to strive towards – 
looking at why each element is essential, how business can move forward and what the 
Global Compact is doing to help (https://www.unglobalcompact.org/library/1151). 
• 
SDGs - The United Nations Sustainable Development Goals are a universal call to 
action to end poverty, protect the planet and ensure that all people enjoy peace and 
prosperity. 
• 
GRI Standards - The Global Reporting Initiative’s GRI Standards are the first global 
standards for sustainability reporting. They feature a modular, interrelated structure, and 
represent the global best practice for reporting on a range of economic, environmental 
and social impacts (https://www.globalreporting.org/standards). 
• 
Sustainability Accounting Standards Board - The Sustainability Accounting Standards 
Board is a US non-profit organization incorporated in 2011 to develop and disseminate 
sustainability accounting standards (www.sasb.org).  
• 
CDP - The CDP (formerly the "Carbon Disclosure Project") is an organisation based in 
the United Kingdom which supports companies and cities to disclose the environmental 
impact of major corporations. It aims to make environmental reporting and risk 
management a business norm, and drive disclosure, insight and action towards a 
sustainable economy (www.cdp.net).  
• 
WFE Website - The World Federation of Exchanges, formerly the Federation 
Internationale des Bourses de Valeurs, or International Federation of Stock Exchanges, 
is the trade association of 63 publicly regulated stock, futures, and options exchanges 
(www.world-exchanges.org).  
• 
Greenhouse Gas Protocol - A nearly 20-year long partnership between the World 
Resources Institute (WRI) and the World Business Council for Sustainable Development 
(WBCSD), the Greenhouse Gas Protocol (GHG Protocol) works with governments, 
industry associations, NGOs, businesses, and other organizations around the world to 
build credible, effective, and robust GHG accounting and reporting platforms that serve 
as a foundation to address climate change. It establishes comprehensive, global, 
standardized frameworks for measuring and managing emissions from private and 
public sector operations, value chains, products, cities, and policies 
(www.ghgprotocol.org)

ENVIRONMENTAL, SOCIAL AND GOVERNANCE – DECEMBER  2017 
19 of 19 
• 
Corporate Eco Forum – Corporate Eco Forum is an invitation-only membership 
organization for large companies that demonstrate a serious commitment to 
sustainability as a business strategy issue - (http://www.corporateecoforum.com/) 
• 
World Environment Centre – The World Environment Centre is an independent, global, 
non-profit, non-advocacy organization that advances sustainable development through 
the business practices of member companies and in partnership with governments, 
multi-lateral organizations, non-governmental organizations, universities and other 
stakeholders - (http://www.wec.org).