Hong Kong Exchange Mandates IFRS-Based Climate Disclosure from 2025

In a significant move towards greater transparency and sustainability, the Stock Exchange of Hong Kong has declared that all listed companies must now furnish mandatory climate-related disclosures. These disclosures are to be in accordance with the newly introduced reporting standards by the IFRS Foundation’s International Sustainability Standards Board (ISSB), focusing initially on Scope 1 and 2 emissions. The requirement is slated to take effect from the 2025 reporting year.

This announcement comes on the heels of a consultation initiated by the exchange last year, which aimed to introduce new climate-related disclosure standards for companies. Following the consultation period, during which the exchange sought feedback from stakeholders, it received widespread support for its proposed initiatives. This consensus led to the decision to formally adopt the consultation proposals.

In June 2023, the IFRS introduced its inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards, signaling a significant milestone in global sustainability reporting. The following month, in July, IOSCO, a prominent international policy forum and standards setter for securities regulators, urged regulators worldwide to integrate these standards into their sustainability reporting frameworks.

This strategic decision by the Stock Exchange of Hong Kong to mandate climate-related disclosures aligns with broader initiatives in the region. Just last month, the Hong Kong government unveiled its vision for cultivating a robust ecosystem for sustainability disclosure. This comprehensive approach involves collaboration with regulators and stakeholders to formulate a roadmap for the adoption of ISSB standards. Additionally, the government aims to develop local sustainability reporting standards that harmonize with ISSB guidelines, fostering consistency and alignment with international best practices.

Katherine Ng, Head of Listing at Hong Kong Exchanges and Clearing Limited (HKEX), emphasized the significance of the New Climate Requirements in the broader context of Hong Kong's roadmap for adopting ISSB Standards. This initiative plays a pivotal role in HKEX's continuous endeavors to equip listed companies for forthcoming sustainability reporting obligations aligned with locally developed sustainability disclosure standards. By bolstering transparency and accountability in Hong Kong's capital markets, these efforts aim to elevate the attractiveness and competitiveness of the region on the global stage.

Katherine Ng also underscored the significance of the New Climate Requirements in Hong Kong's strategy for adopting ISSB Standards. This initiative is integral to HKEX's ongoing efforts to prepare listed companies for upcoming sustainability reporting requirements, which will adhere to locally devised sustainability disclosure standards. By enhancing transparency and accountability in Hong Kong's financial markets, these initiatives aim to enhance the appeal and competitiveness of the region internationally.

Ng expressed HKEX's satisfaction in being among the world's pioneering exchanges to strengthen climate-related disclosure requirements based on IFRS S2, citing a robust market mandate. Additionally, HKEX is adopting a phased approach and offering implementation reliefs to assist listed companies in meeting the new requirements within a reasonable timeframe, without imposing undue burden.

Click here to access IFRS S1 and IFRS S2 Standards.