In late March 2022, the Green and Sustainable Finance Cross-Agency Steering Group (“Steering Group”) co-chaired by the Hong Kong Monetary Authority and the Securities and Futures Commission (“SFC”) welcomed publication of the proposed general requirements for disclosure of sustainability-related financial information and the climate disclosure requirements by the International Sustainability Standards Board (“ISSB”). In line with the Steering Group’s strategic plan to support the development of a global uniform set of sustainability reporting standards, the SFC and Hong Kong Exchanges and Clearing Limited (“HKEx”) are currently engaging with industry practitioners including among others, the audit and accounting profession, listed companies, and other key stakeholders to evaluate and gather feedback on how the ISSB’s proposed disclosure requirements can be applied in Hong Kong.
The proposed sustainability standards
General requirements for disclosure of sustainability-related financial information
The proposed General Requirements mandate the disclosure of information about significant sustainability-related risks and opportunities. Key highlights of the proposed general disclosure requirements are as follows:
The proposed climate-related disclosures require a company to disclose information based on the Fourfold Approach that would enable an investor to assess the effect of climate-related risks and opportunities on its enterprise value.
The Steering Group has time and again endeavoured to keep the Hong Kong capital market up with international standards. Market players should stay abreast of the development of international standards and brace themselves for the anticipated localization of ISSB’s sustainability-related financial information and the climate disclosure requirements.