On Apr. 14, HKEX proposed climate-related disclosures enhancement.
HKEX issued consultation paper on enhancement of climate-related disclosures, to seek views and comments on proposed changes to our ESG reporting framework.
HK GVT aims for carbon neutrality by 2050 and launched action plan with initiatives to reduce emissions, driving demand for sustainability disclosures from companies.
HKEX is reviewing ESG framework to align with international standards and promote sustainability, based on feedback from issuers and global regulatory developments.
Key Proposals
Mandate all issuers to make climate-related disclosures in their ESG reports, also introduce new climate-related disclosures based on the ISSB climate standard.
Acknowledge readiness of issuers and concerns expressed by issuers and market practitioners, proposing interim provisions for certain disclosures during interim period.
Core disclosures pillars: governance, strategy, risk management, metrics and targets.
Going Forward
Take into account international developments and Hong Kong market circumstances.
Interim provisions provided for certain disclosure requirements for first two years.
IPO applicants are expected to disclose ESG risks, comply with new rules upon listing.
Implementation guidance will be issued to assist issuers in complying with the new rules, with references to external frameworks, and glossary of terms to assist issuers.
Ongoing monitoring, guidance, encouragement to utilize ESG educational resources.
HKEX, HK SFC Reaction
On the same day, HKEX commented on, and HK SFC reacted to, the proposals above.
Proposals mark significant milestone in achieving a standing commitment to mandate FSB TCFD-aligned disclosures by 2025 as announced by the steering group (#77084).
Acknowledging the readiness of the issuers and their concerns, HKEX proposes interim provisions for certain disclosures for first two reporting years following Jan. 1, 2024.
HK SFC supports the proposals, encourages interested parties to submit comments.
Said proposals adopt a balanced approach which aims to give appropriate flexibility for listed firms whilst promoting relevant, consistent, comparable disclosures to investors.
Effectiveness
The consultation is open until Jul. 14, 2023.
Nov. 2023 Consultation Update
On Nov. 3, 2023, HKEX updated consultation on enhancing climate change disclosure.
ISSB will publish ISSB adoption guide to support jurisdictional regulators for implementation considerations; adoption guide will be available by the end of 2023.
HKEX will take into account the recommended approaches on the scaling and phasing-in of requirements of the adoption guide when finalizing the listing rule amendments.
Listing rule amendments implementation date will be postponed to Jan. 1, 2025.
Apr. 2024 Conclusions
On Apr. 19, 2024, HKEX issued conclusions to above consultation on climate disclosure.
115 responses were received from a wide range of respondents, showing broad-based support for proposals; in view of this feedback, HKEX will adopt consultation proposals.
HKEX will closely align proposals with IFRS S2 Climate-related disclosures (IFRS S2) and provide implementation guidance referencing IFRS S1, to aid issuer compliance.
Introduced implementation reliefs, including proportionality and scaling-in measures, to address concerns over the reporting challenges that some issuers may face.
HK SFC welcomes HKEX conclusions on enhancing disclosure requirements for listed companies; requirements will be implemented in phases starting from Jan. 1, 2025.
In Aug. 2024, HKMA shared practice on climate-related risk governance, see #223488.
Dec. 2024 HKEX Review Findings
On Dec. 19, 2024, HKEX said it published the review findings of issuers' ESG practice disclosures, finding a 91%+ reporting rate across most aspects except labor standard.
Expanded review scope by 522% using AI technology to assess all listed companies' reports as of Jun. 30, 2024; found improved quality in ESG governance disclosures.
Large-cap issuers demonstrate understanding of upcoming climate requirements; many reporting re climate scenario analysis, scope 3 emissions, environmental targets.
Updated ESG academy guidance with new reg focus, added good practice examples.
