The Hong Kong Stock Exchange (HKEX), which is a subsidiary of Hong Kong Exchanges and Clearing Ltd [388:HK], is proposing a new policy under its environmental, social and governance (ESG) framework, as reported by Reuters on April 14. The policy would make it compulsory for all companies listed on the exchange to disclose their climate-related information in their ESG reports, as Hong Kong aims to become a leading green and sustainable financial center. The current “comply or explain” system, which allows issuers to avoid these requirements by providing an explanation, would be replaced by the mandatory disclosure regime.
This move is in line with Hong Kong’s target to become carbon neutral by 2050, and to establish a low-carbon, climate-resilient economy. The proposed disclosure regime is also expected to align with the International Sustainability Standards Board (ISSB) Climate Standard, covering four aspects of governance: strategy, risk management, metrics, and targets. The HKEX hopes that this enhanced ESG regime will further strengthen Hong Kong’s position as a trusted location for capital raising and an international financial center. The HKEX has already taken steps to promote ESG reporting, but this proposal represents a significant step forward in its efforts to promote sustainability and climate action.