The Stock Exchange of Hong Kong announced that all listed companies will be required to begin providing mandatory climate-related disclosures based on the IFRS Foundation’s International Sustainability Standards Board (ISSB) new reporting standards, with Scope 1 and 2 emissions disclosure beginning as of the 2025 reporting year.

The announcement follows the launch by the exchange last year of a consultation proposing new climate-related disclosures for companies. The exchange reported that it “received broad-based support for its proposals,” leading to the decision to adopt the consultation proposals.

The IFRS released the inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards in June 2023, and in July, IOSCO, the leading international policy forum and standards setter for securities regulators called on regulators to incorporate the standards into their sustainability reporting regulatory frameworks.

The decision also follows the release last month by the Hong Kong government of a statement setting out its approach towards the development of a comprehensive ecosystem for sustainability disclosure, including working with regulators and stakeholders to develop a roadmap on the appropriate adoption of the ISSB standards, and to develop local sustainability reporting standards aligned with the ISSB.

Katherine Ng, Head of Listing at Hong Kong Exchanges and Clearing Limited (HKEX), said:

 “The New Climate Requirements form part of the wider Hong Kong roadmap for the local adoption of the ISSB Standards. This will be an important part of our ongoing efforts to prepare listed companies towards eventual sustainability reporting in accordance with the local sustainability disclosure standards under development, enhancing Hong Kong’s capital markets attractiveness and competitiveness.”

Under the new rules, all issuers on the exchange will be required to begin Scope 1 and 2 GHG emissions disclosures for reporting periods beginning from January 1, 2025. LargeCap issuers – those included in the Hang Seng Composite LargeCap Index, which account for 80% of the HSCI composite’s market capitalization – and other Main Board issuers will also be required to provide other disclosures, including reporting on Scope 3 value chain emissions on a comply-or explain basis starting in 2025, with LargeCap issuers to be required to provide these disclosures on a mandatory basis the following year. Small and mid-size “GEM” issuers will be able to provide disclosure other than Scope 1 and 2 emissions on a voluntary basis.

Ng said:

“With a strong market mandate, we at HKEX are pleased to be among the world’s first exchanges to enhance the climate-related disclosure requirements based on IFRS S2. We are also adopting a phased approach and implementation reliefs to support listed companies to meet the new requirements without undue burden and within a reasonable timeframe.”