Hong Kong’s decisive path toward mandatory ISSB-aligned ESG Reporting

As of 1 January 2025, listed companies in Hong Kong are subject to standardized, internationally aligned ESG disclosure requirements. The updated ESG Reporting Code issued by the Hong Kong Exchanges and Clearing Limited (HKEX) introduces climate-related reporting based on the ISSB’s IFRS S2 standard.

This marks the beginning of a well-defined and pragmatic transition to mandatory sustainability reporting in Hong Kong — one that balances ambition with realism.

New HKEX Climate Disclosure Requirements

Under the revised ESG Reporting Code, all listed companies must begin reporting their Scope 1 and Scope 2 greenhouse gas (GHG) emissions for financial years starting on or after 1 January 2025. This is just the beginning.

Additional disclosures — covering strategy, governance, risk management, and climate-related metrics — will be phased in:

• From 2025: All listed companies must report on a “comply or explain” basis for the broader set of climate-related disclosures.
• From 2026: LargeCap issuers (Hang Seng Composite LargeCap Index constituents) will be required to provide full, mandatory disclosures aligned with IFRS S2.
• GEM-listed issuers are encouraged to disclose voluntarily.

Understanding the Regulatory Landscape

While HKEX governs disclosure requirements for listed companies, it does not operate alone. Hong Kong’s sustainability reporting architecture is underpinned by a clear division of roles:

• The Hong Kong Institute of Certified Public Accountants (HKICPA) is the official standard setter, responsible for developing the Hong Kong Sustainability Disclosure Standards (HK SDS).
• The Accounting and Financial Reporting Council (AFRC) oversees the HKICPA’s standard-setting function.
• Sector-specific regulators — including the HKMA, SFC, and Insurance Authority — will determine how and when these standards apply to non-listed financial institutions.

The HK SDS: Going Beyond Climate

In December 2024, the HKICPA issued the first two HK SDS standards:

• HKFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information
• HKFRS S2 – Climate-related Disclosures

These are fully aligned with IFRS S1 and S2, covering not just climate but a wider set of sustainability-related financial information. The standards will come into effect on 1 August 2025, with mandatory application for large publicly accountable entities expected from 2028.

A Steppingstone Toward Full Sustainability Reporting

The HKEX’s revised ESG Reporting Code is more than an update — it’s a strategic steppingstone toward full application of the HK SDS. This staged approach gives companies time to build capabilities and internal alignment, while also preparing for broader, more comprehensive reporting obligations.

The HKEX plans to review implementation progress in 2027, setting the stage for wider application of the HK SDS from 2028 onward.

A Realistic and Committed Path Forward

Hong Kong has charted a clear, credible path: one that is committed to global alignment, cautious in its rollout, and realistic in its expectations.

As this transition unfolds, it’s also clear that stakeholder expectations are evolving. Investors, employees, and civil society alike are looking for transparent, accessible insight into ESG strategy and performance — not buried in a static PDF, but published online through interactive microsites and dedicated ESG data hubs.

Some companies are already leading by example — combining compliance with best-in-class communication, and delivering ESG disclosures that meet both regulatory demands and stakeholder expectations. Notable examples include:

• CLP – already applying the HK SDS, CLP’s bilingual microsite features an interactive materiality matrix and a comprehensive data hub.
• Swire Pacific – offering a bilingual interactive ESG reporting hub that brings strategy, data, and impact together.

These microsites go beyond compliance — they represent the new standard for digital-first ESG communication in Hong Kong.