Hong Kong SAR government issues vision statement on adoption of the ISSB standards

On 25 March 2024, Hong Kong’s Financial Services and the Treasury Bureau (the FSTB) issued a vision statement outlining the Hong Kong SAR’s government and financial regulator’s commitment to developing a robust sustainability disclosure ecosystem in line with international standards (the Vision Statement). The Vision Statement sets out the goal for Hong Kong to be among the first jurisdictions to align its sustainability disclosure requirements with the International Sustainability Standards Board (ISSB) sustainability disclosure standards (the ISSB Standards). It also gives an indication of several upcoming milestones. 

To recap – the Government announced that it is working with financial regulators and stakeholders to develop a roadmap (the Roadmap) for Hong Kong on the appropriate adoption of the ISSB Standards. The Green and Sustainable Finance Cross-Agency Steering Group (the Steering Group) has a dedicated working group (co-led by the FSTB and the Securities and Futures Commission) to prepare the Roadmap. The Hong Kong Institute of Certified Public Accountants serves as the sustainability reporting standard setter and will develop the local sustainability reporting standards (the Hong Kong Standards) aligned with the ISSB Standards, as well as supporting guidance (see our previous blog post). 

The Vision Statement indicates that the Roadmap should be launched by the end of 2024 – which is to provide a well-defined pathway on sustainability reporting for businesses in Hong Kong as well as sufficient time for businesses to prepare for implementing the Hong Kong Standards.

The Vision Statement also outlines the following: 

Application – The Hong Kong Standards are intended to cover listed companies and regulated financial institutions, such as banks, fund managers, insurance companies, and MPF trustees. 

Phased implementation – The Government will adopt a phased approach when implementing the Hong Kong Standards, with the initial priority being given to publicly accountable entities such as listed companies and regulated financial institutions, taking into account their relative preparedness and capabilities. Note that the Stock Exchange of Hong Kong Limited (the Exchange) launched a consultation in 2023 on enhancing climate-related disclosure requirements for Hong Kong listed issuers (see our previous blog post). The Vision Statement mentions that the Exchange is expected to publish the consultation conclusions by the end of Q2 2024, with implementation of the new requirements anticipated to take effect from 1 January 2025.

Assurance requirements – The Accounting and Financial Reporting Council will lead the development of local sustainability–related assurance and ethics standards, taking into account the latest global developments, including relevant discussions at the International Auditing and Assurance Standards Board and International Ethics Standards Board for Accountants. 

Capacity building – The Government will continue to support the existing capacity-building schemes. Capacity enhancement programmes will also be developed for preparers, reporting and assurance professionals, and sustainability-related service providers. 

Facilitating the use of technological solutions – The Vision Statement emphasises that there will be a continued focus on improving data availability, supporting data collection and reporting, and promoting the use of green and sustainable financial technology solutions, in addition to the measures that are already available, such as: 

• Climate and environmental risk questionnaire for non-listed companies and SMEs (the Questionnaire) – The Steering Group launched the Questionnaire in 2022 to assist the sustainability reporting processes of corporates concerned and raise their sustainability visibility to lenders, investors and supply chain clients. It also enables the collection and assessment of company-level data by financial institutions for risk assessment and relevant business decisions. Its digital version further facilitates reporting and supports broader consent-based data sharing between corporates and financial institutions. 
• Greenhouse gas emissions calculation and estimation tools - The Steering Group, in collaboration with a local university, launched the calculation tool and estimation tool in February 2024 to aid sustainability reporting by corporates and financial institutions in Hong Kong. 

2024 will be a critical year in the implementation of various sustainability disclosure regimes across the globe and we are seeing countries across Asia proposing plans to adopt the ISSB Standards, including Singapore (see our previous blog post) and Malaysia (see our previous blog post). 

With this latest announcement from Hong Kong, it is a helpful confirmation on the direction of travel.