Hong Kong Takes Bold Step Forward with New Climate Reporting Standards

In a significant move towards enhancing corporate transparency and accountability in environmental issues, Hong Kong's Institute of Certified Public Accountants (HKICPA) unveiled new climate reporting standards on December 17, 2024. These standards, namely HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climate-related Disclosures, are designed to align seamlessly with the International Sustainability Standards Board (ISSB) standards.

This standardized framework is set to revolutionize the way companies report on sustainability, fostering greater consistency and comparability in corporate sustainability reports. This initiative closely follows the Hong Kong government's Roadmap Sustainability Disclosure announced earlier, which delineates a plan to implement mandatory sustainability reporting for businesses.

Effective 2025, main board issuers will be obligated to report under the IFRS S2 Climate-related Disclosures based on a "comply or explain" principle. Meanwhile, large publicly accountable entities will be required to adopt these standards starting in 2026, with all publicly listed companies projected to comply by 2028 at the latest.

HKICPA President Edward Au emphasized the significance of these new standards, stating, "The HKFRS SDS are fully aligned with the ISSB Standards, and this is critical to maintaining and enhancing Hong Kong's competitiveness in international capital markets.” This robust framework highlights Hong Kong’s commitment to sustainable development and positions it as a leader in climate accountability on a global scale.

Interestingly, Hong Kong is not alone in this endeavor. Other nations have also been ramping up their reporting requirements. For instance, Canada announced plans in October to implement mandatory climate-related disclosures by 2050, targeting large federally incorporated private companies with two significant sustainable finance initiatives aimed at achieving net-zero emissions.

Furthermore, Switzerland has made moves to broaden the scope of mandatory climate reporting, with proposals from the Swiss Federal Council aimed at including companies with a workforce of at least 250 employees in the new regulations.

These developments signal a growing international trend toward enhanced sustainability reporting, and Hong Kong’s proactive approach could set a standard that influences global practices in corporate environmental accountability. Stay tuned for more updates on how these changes unfold and impact the business landscape!