The Hong Kong government, through the Hong Kong Institute of Certified Public Accountants (HKICPA), has proposed new sustainability and climate-related reporting standards aligned with the International Financial Reporting Standards (IFRS). These standards, developed by the IFRS Foundation’s International Sustainability Standards Board (ISSB), aim to standardize how companies disclose environmental, social, and governance (ESG) data. The proposed standards, HKFRS S1 and S2, are expected to come into effect in August 2025. 

This move is part of Hong Kong’s broader plan to enhance its sustainability disclosure ecosystem, as outlined in its recent “vision statement.” The government aims to align local sustainability reporting with international best practices, ensuring companies, including listed firms, financial institutions, banks, and fund managers, meet global expectations. The alignment with IFRS standards is seen as a crucial step in making Hong Kong a leading hub for sustainable finance in the region. 

The IFRS S1 and S2 standards were introduced to provide investors with consistent and reliable information about companies’ sustainability risks and opportunities. Hong Kong’s proposal to fully converge its reporting standards with IFRS follows an extensive consultation process with stakeholders and a technical study on the feasibility of adopting ISSB standards locally. 

Roy Leung, President of the HKICPA, emphasized that these standards are vital for improving the consistency and comparability of ESG reporting in Hong Kong, helping investors make informed decisions. Jingdong Hua, Vice Chair of the ISSB, echoed this sentiment, stating that full alignment would allow investors to compare Hong Kong companies with their global counterparts. 

The HKICPA is seeking public feedback on the proposed standards, with the consultation period open until October 27, 2024. 

Sources: 

https://www.esgtoday.com/hong-kong-proposes-fully-ifrs-aligned-sustainability-reporting-standards/ 

https://fintech.global/2024/09/25/hong-kong-sets-2025-goal-for-aligned-global-sustainability-standards/ 

https://www.commercialriskonline.com/hong-kong-publishes-sustainability-standards-to-align-with-ifrs/ 

https://esgnews.com/hong-kong-sets-stage-for-global-sustainability-reporting-standards-with-hkfrs-s1-and-s2/