Hong Kong Exchange explores mandatory ISSB disclosures

Posted on April 24, 2023 by Editor

The Hong Kong Stock Exchange (HKEX) has proposed making climate related disclosures mandatory for all issuers, requiring reporting using the International Sustainability Standards Board (ISSB) standards, from 1 January 2024.

The HKEX published a consultation paper this week that seeks feedback from market participants on its proposals to enhance climate-related disclosures under its environmental, social and governance (ESG) framework. The exchange is proposing to mandate all issuers to make climate-related disclosures in their ESG reports and to introduce new climate-related disclosures aligned with the ISSB standards.

The Hong Kong Green and Sustainable Finance Cross-Agency Steering Group already committed the HKEX to mandating Task Force on Climate-related Financial Disclosures (TCFD) recommendations by 2025. As the ISSB standards are based on the principles of the TCFD, adopting these new standards is a natural next step for the HKEX.

The proposals include interim provisions to exempt companies from certain, more burdensome disclosures such as Scope 3 Emissions for the first two reporting years, in order to facilitate and ease implementation.

As the initial two ISSB standards S1 (general requirements) and S2 (climate) have an agreed upon implementation date of January 2024, and are expected to be finalised by the end of June we expect many more regulators and financial institutions to follow the HKEX’s example in the second half of this year. Our suggestion, unsurprisingly, is to maximise the value of the mandate by leveraging the upcoming ISSB XBRL taxonomy.

The consultation is open for comment until 14 July 2023.

Read more here.

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