Summary of HKEx's New Climate Disclosure Requirements

On 19 April, 2024, the Stock Exchange of Hong Kong Limited (HKEx) announced new climate-related disclosure requirements, which will be effective from 1 January, 2025. These requirements are part of an initiative to enhance environmental, social, and governance (ESG) reporting among listed companies.

Key Components of the New Climate Requirements:

Alignment with International Standards:

The new regulations reference the IFRS Sustainability Disclosure Standards (ISSB Standards), aiming to provide a global baseline for sustainability reporting.

Phased Implementation:

Scope 1 and Scope 2 Emissions: Mandatory disclosure for all listed issuers starting from financial years commencing on or after 1 January, 2025.

Main Board Issuers: Required to report on additional climate-related disclosures on a "comply or explain" basis from the same date.

Large Cap Issuers: Mandatory comprehensive reporting begins in financial years commencing on or after 1 January, 2026.

GEM Issuers: Encouraged to voluntarily disclose climate-related information starting from 1 January, 2025.

Core Disclosure Areas:

The requirements mandate disclosures across four core pillars: governance, strategy, risk management, and metrics/targets related to climate risks and opportunities.

Implementation Relief:

The ESG Code introduces several relief measures to ease the reporting burden:

Reasonable Information Relief: Allows issuers to provide information that is reasonable and supportable without undue effort.

Capabilities Relief: Considers issuer capabilities and resources.

Commercial Sensitivity Relief: Permits non-disclosure of sensitive information in specific circumstances.

Financial Effects Relief: Allows qualitative disclosures instead of quantitative when applicable.

Guidance for Compliance:

HKEx has published Implementation Guidance to support issuers in adapting to the new requirements, encouraging early preparation and alignment with international standards.

Recommendations for Issuers:

Companies are advised to familiarise themselves with the new requirements and the ISSB Standards, assess their internal processes, and implement necessary changes to ensure compliance by the effective dates.

This initiative is part of Hong Kong's broader strategy to enhance its sustainability disclosure framework and align with global standards, aiming to boost the region's competitiveness in sustainable finance.