Sustainability Report Preparation in Hong Kong
In Hong Kong’s dynamic business environment, sustainability reporting has evolved to a regulatory necessity. With investors, regulators, and stakeholders demanding greater transparency, companies must now align their ESG disclosures with both local and global standards. Recent updates to Hong Kong’s sustainability regulations—particularly the adoption of HKFRS S1 and HKFRS S2—underscore the urgency for businesses to act.
Hong Kong’s Latest Sustainability Regulations
The Hong Kong Institute of Certified Public Accountants (HKICPA) has aligned local sustainability disclosure standards with global benchmarks by adopting IFRS S1 and IFRS S2 (also known as ISSB Standards). Published on 12 December 2024, the new HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climate-related Disclosures will reshape sustainability reporting in Hong Kong. These standards emphasize transparency in governance, strategy, risk management, and metrics related to climate impacts, ensuring disclosures are decision-useful for investors.
Key Compliance Timelines
- 1 January 2025: Main Board issuers must disclose climate-related information on a “comply or explain” basis under HKEX’s ESG Code.
- 1 August 2025: HKFRS S1 and S2 come into effect.
- 1 January 2026: Large Cap Issuers must mandatorily disclose climate-related requirements.
- 2027: HKEX will launch market consultation on mandatory sustainability reporting in accordance with HKFRS S1 and S2.
- 2028: Large publicly accountable entities (PAEs) must fully comply with HKFRS S1 and S2.
Notably, existing HKEX ESG guidelines remain in effect until August 2025, requiring companies to juggle overlapping frameworks during the transition. This phased approach demands proactive planning to avoid last-minute bottlenecks.
Challenges in Sustainability Report Preparation
Preparing a compliant sustainability report involves navigating:
- Complex Regulatory Overlaps: Balancing HKEX’s ESG Code, HKFRS S1/S2, and global standards like GRI and IFRS.
- Data Collection Rigor: Accurately quantifying Scope 1-3 emissions, climate risks, and social metrics.
- Stakeholder Expectations: Addressing material issues identified through engagement with investors, employees, and supply chains.
- Timely Compliance: Meeting aggressive deadlines while ensuring reports withstand regulatory and investor scrutiny.
Companies that delay risk non-compliance penalties, reputational damage, and missed opportunities to attract ESG-focused capital.
GreenCo’s Earlier Preparation Assistance
GreenCo has taken proactive steps to support companies that want to prepare earlier for the enhanced requirement. Acknowledging the critical role of climate-related disclosures and the necessity for businesses to align with shifting regulatory frameworks, we have enhanced our data collection platform to better support organizations. This upgraded system streamlines the gathering of data essential for comprehensive reporting, allowing companies to fulfill compliance requirements seamlessly.
We recognize that addressing climate change is an ongoing journey requiring sustained effort. To this end, we continue to prioritize helping businesses craft and implement robust ESG strategies. Drawing on our specialized knowledge and tools, we provide tailored guidance to enable organizations to integrate sustainability into their operations and proactively manage climate risks.
Through proactive support, our goal is to equip companies with the tools to anticipate regulatory shifts, improve transparency, and uphold accountability in their climate-related efforts. We are committed to empowering businesses to contribute meaningfully to a resilient, sustainable future and to lead transformative action in the global fight against climate change.
Act Now to Lead in Sustainability
Navigating the publication of a new sustainability reporting standard can be confusing. Partner with GreenCo to navigate complexities, align with HKFRS S1/S2, and turn ESG ambitions into measurable outcomes.
Contact GreenCo today to schedule a consultation. Let our experts help you prepare a sustainability report that not only complies but also captivates stakeholders and drives long-term value.
