HKEX ESG reporting framework - New climate-related disclosure requirements

The new regulations were developed with reference to the global ISSB’s IFRS S2 (climate-related disclosures) that were published on 26 June 2023. ISSB standards are the global framework for capital markets to develop sustainability-related financial information and for markets to assess relevant sustainability risks and opportunities. The relevant regulations are reflected in Part D of the HKEX’s ESG Code (Appendix C2 to the Listing Rules) and the updated amendment of which can be found here.

In implementing the New Climate Requirements, the HKEX adopted a phase approach that segregates issuers into different tiers, the details of which are as follows:

	New Climate Requirements Effective Date (Note 1)
	Disclosure on Scope 1 and Scope 2 greenhouse gas emissions	Disclosure other than Scope 1 and Scope 2 greenhouse gas emissions
LargeCap Issuers (Note 2)	Mandatory disclosure (financial years commencing on or after 1 January 2025)	“Comply or explain”: in financial years commencing on or after 1 January 2025 Mandatory disclosure: in financial years commencing on or after 1 January 2026(Note 3)
Main Board Issuers (other than LargeCap Issuers)		“Comply or explain” (financial years commencing on or after 1 January 2025)
GEM issuers		Voluntary disclosure (financial years commencing on or after 1 January 2025)

_{Note 1: This table only summarises issuers’ disclosure obligations under the new Part D of the ESG Code, non-climate disclosure requirements set out in Parts A to C of the ESG Code will continue to apply.
Note 2: Hang Seng Composite LargeCap Index (HSCLI) constituents – for details, please visit here.
Note 3: Issuers that are constituents of the HSCLI throughout their entire financial year 2025 will be required to make mandatory climate disclosure in respect of their ESG reports for the financial year 2026, and such ESG reports will be published in 2027. Moreover, once an issuer becomes subject to mandatory disclosure of the New Climate Requirements, it must continue to comply with such disclosure requirements even if it subsequently ceases to be a HSCLI constituent}

Scope 1 greenhouse gas emissions refer to direct emissions that occur from sources that are owned or controlled by the issuer, and Scope 2 greenhouse gas emissions refer to indirect emissions from the generation of purchased or acquired electricity, steam, heating or cooling consumer by the issuer. Scope 3 greenhouse gas emissions refer to indirect emissions occur in the value chain of the issuer, some examples of which include emissions resulting from business traveling, employee commuting and upstream/downstream distribution etc.

The HKEX acknowledged the potential reporting challenges faced by some issuers and accordingly, implementation reliefs including the following will be in place:

1. Reasonable Information Relief - an issuer is allowed to make disclosures based on reasonable and supportable information that is available at the reporting date without undue cost or effort;
2. Capabilities Relief - an issuer is allowed to use an approach that is informed by their available skills, capabilities and resources in preparing disclosures; and
3. Commercial Sensitivity Relief – an issuer is allowed to withhold disclosure of commercially sensitive information if such information is not already publicly available and the disclosure of such information could reasonably be expected to seriously prejudice the economic benefits of the issuer.

These reliefs incorporated proportionality and scaling-in measures to address the concerns expressed by some issuers by virtue of a lack of resources or other technical difficulties.
Issuers under the “comply or explain” regime must provide considered reasons, including any implementation relief applied, for non-disclosure of information required.

The HKEX is among the world’s first stock exchanges to enhance climate-related disclosure requirements with IFRS S2 as a baseline. The information required to be disclosed will serve as a benchmark for global capital markets to accurately evaluate relevant sustainability risks and opportunities. As discussed in the HKEX’s Consultation Conclusions, the New Climate Requirements serves as an interim step in the wider roadmap for Hong Kong to locally and comprehensively adopt the ISSB standards. Going forward, when the local sustainability reporting standards are available in Hong Kong, the HKEX will consider whether and how to transition towards sustainability reporting in accordance with the locally adopted ISSB Standards. Therefore, it is essential for issuers to keep abreast of any potential further updates on the Hong Kong ESG regulatory developments and seek independent professional advice to ensure the relevancy and credibility of the information disclosed. Meanwhile, issuers are also encouraged to analyse the implications of the New Climate Requirements ahead and enhance relevant governance and control accordingly.

To assist issuers’ compliance with the New Climate Requirements, an Implementation Guidance containing a recommended workflow and other relevant supplementary information published by the HKEX can be found here.