Quick Guide: Key Sustainability Disclosure Regimes: Hong Kong SAR: HKFRS sustainability disclosure standards

 In 2024, the following were published: 

• The Hong Kong Institute of Certified Public Accountants (the “HKICPA”) – designated as the sustainability reporting standard setter in Hong Kong – published the HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climate-related Disclosures (the “HKFRS Sustainability Disclosure Standards”), with an effective date of 1 August 2025. The HKFRS Sustainability Disclosure Standards are aligned with the International Sustainability Standards Board’s (“ISSB”) - IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. 

• The Hong Kong SAR Government published the “Roadmap on Sustainability Disclosures in Hong Kong” (the “Roadmap”) which sets out the approach and proposed timeline for “publicly accountable entities” or “PAEs” to adopt the HKFRS Sustainability Disclosure Standards.  

As outlined in the Roadmap, Hong Kong will prioritise the application of the HKFRS Sustainability Disclosure Standards by large PAEs under a phased approach, with the aim to fully adopt the standards by 2028. 

PAEs include listed entities and regulated financial institutions in Hong Kong, such as banks, fund managers, insurance companies and MPF trustees.

Large PAEs in Hong Kong include listed issuers which are Large Cap Issuers (i.e. issuers that are Hang Seng Composite LargeCap Index constituents), as well as non-listed financial institutions carrying a significant weight in Hong Kong.

The HKFRS Sustainability Disclosure Standards have an effective date of 1 August 2025. 

Despite this effective date, as it currently stands, the standards are voluntary and will remains so unless or until there are legislative or regulatory requirements to mandate their use.

Relevant authorities and regulators (including the HKEX, HKMA, SFC, MPFA and IA) will need to conduct their own consultations to determine the approach and timing of adopting the standards.

In the interim, organisations that are required to prepare sustainability disclosures will continue to report in accordance with the rules, regulations or guidelines specified by the relevant authorities/regulators. 

Organisations may consider voluntarily preparing sustainability disclosures in accordance with the HKFRS Sustainability Disclosure Standards. 

HKFRS S1 

• Sets out overarching requirements for a company to disclose information about sustainability-related risks and opportunities that is useful to users of general purpose financial reports.

• Is designed to underpin all other HKFRS standards in terms of setting scope, objective, core content, and presentation requirements.

• Uses the same the four pillars as the Task Force for Climate-related Financial Disclosures (“TCFD”) Recommendations in requiring entities to make disclosures about governance, strategy, risk management, metrics and targets.

HKFRS S2 

• Sets out additional requirements that relate to climate-related risks and opportunities.

• Incorporates and builds on the TCFD Recommendations.

• Requires disclosure of Scope 1, 2 and 3 greenhouse gas (“GHG”) emissions. However, preparers do not have to report on Scope 3 emissions in the first year of reporting under the HKFRS Sustainability Disclosure Standards. 

• Requires disclosure of (among other things): physical risks resulting from climate change; transition risks associated with the transition to a lower-carbon economy (which could include regulatory, technological, market, legal or reputational risks); and climate-related opportunities available to the entity.

For issuers listed in Hong Kong, the Hong Kong Exchanges and Clearing Limited or “HKEX” lifted the climate-related disclosure requirements in April 2024 (the “HKEX New Climate Requirements”) which apply in phases for financial years commencing on or after 1 January 2025. The HKEX New Climate Requirements have been developed based on the IFRS S2 under the “climate-first” approach.

As set out in the Roadmap, the HKEX New Climate Requirements are intended as an interim step for issuers to start climate reporting early in accordance with the ISSB standards. 

HKEX intends to consult the market in 2027 on mandating listed PAEs to report on sustainability following the HKFRS Sustainability Disclosure Standards. It is envisaged that the consultation will focus on a few key points as follows: 

• Replacing the current ESG reporting rules in the Listing Rules (as set out in Appendix C2 Environmental, Social and Governance Reporting Code (Part A to Part D)) with a requirement for listed issuers to publish sustainability reports under the HKFRS Sustainability Disclosure Standards.

• Mandating assurance for sustainability disclosures and the approach in phasing-in these requirements.

The implementation of the HKFRS Sustainability Disclosure Standards is expected to be introduced in a proportionate manner, with the consultation process considering a phasing-in of reporting entities starting with more advanced issuers (e.g. Large Cap Issuers), to ensure proportionality in sustainability-related disclosure requirements. The standards may apply to the first batch of listed issuers for financial years beginning on or after 1 January 2028.

Relevant authorities and regulators (including the HKEX, HKMA, SFC, MPFA and IA) will conduct their own consultations to determine the approach and timing of adopting the HKFRS Sustainability Disclosure Standards.

As discussed in “Interaction with HKEX’s climate-related disclosure requirements” above, HKEX intends to consult the market in 2027 on mandating sustainability reporting in accordance with the HKFRS Sustainability Disclosure Standards for listed PAEs.

The expectation is that relevant financial regulators will conduct sector-specific engagements to determine the approach and timing of adopting the HKFRS Sustainability Disclosure Standards for different financial sectors. 

Subject to stakeholders’ comments and feedback, the aim is for financial institutions (being non-listed PAEs) carrying a significant weight to apply the HKFRS Sustainability Disclosure Standards no later than 2028.

 On 29 December 2025, the Accounting and Financial Reporting Council (“AFRC”) published a consultation paper on the proposed regulatory framework for sustainability assurance. 

It is that (subject to further consultations by HKEX and relevant financial regulators) all entities subject to mandatory reporting using HKFRS Sustainability Disclosure Standards (Mandatory HKSDS Reporting) must obtain independent assurance in phases as follows: 

• Phase 1: Limited assurance over Scope 1 and Scope 2 GHG emission disclosures must be obtained from the third financial year of the Mandatory HKSDS Reporting; and 

• Phase 2: Limited assurance over all remaining mandatory HKSDS disclosures must be obtained from the fifth financial year of the Mandatory HKSDS Reporting.

To illustrate, if an entity is required to comply with Mandatory HKSDS Reporting from FY 2028, Phase 1 will apply from FY2030 while Phase 2 from FY2032.

Mandatory assurance must be carried out in compliance with Hong Kong Standard on Sustainability Assurance 5000 which is fully aligned with the International Standard on Sustainability Assurance (ISSA) 5000.

• HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (the HKFRS S1) 

• HKFRS S2 Climate-related Disclosures (the HKFRS S2)

• FAQs on HKFRS Sustainability Disclosure Standards

• Hong Kong Standard on Sustainability Assurance 5000

• Consultation Paper on the Proposed Regulatory Framework for Sustainability Assurance in Hong Kong

• Blog post - Hong Kong SAR publishes HKFRS Sustainability Disclosure Standards 

• Blog post - Hong Kong SAR Government publishes roadmap on sustainability disclosures

• Quick Guide on Hong Kong SAR: Climate disclosure rules under Hong Kong Listing Rules

• Quick Guide on ISSB standards