The parent company of the Hong Kong Stock Exchange (HKSE) is a step closer to enforcing climate risk disclosures for all companies listed on it with the release of a consultation paper.
Hong Kong Exchanges and Clearing (HKEX) first announced in 2020 it would mandate climate-related disclosures using the recommendations of the Taskforce on Climate-related financial disclosures by no later than 2025 as part of a strategic plan to help the Special Autonomous Region reach net zero emissions by 2050.
Banks, insurers and fund managers will not initially be required to make climate disclosures but have been asked to “increase the coverage of mandatory disclosure as soon as practicable.”
Besides climate risk, listed companies will also be asked to disclose their Scope 3 emissions – those incurred outside the company in their supply chains and the actions of customers.
Responses to identified climate risks must be disclosed in transition plans, such as changes to business model and strategy, adaptation and mitigation efforts.
Companies will also be asked to disclose their resilience strategy to climate-related changes and where possible, the financial impacts of climate-related risks, including the impact on financial performance and cash flows.
The exchange is consulting on the discussion paper and is accepting submissions until 14 July 2023.
Some leeway will be given to companies disclosing Scope 3 emissions and the quantitative impact on their financial performance for the first two reporting periods after the scheme comes into effect on 1 January 2024.
The climate-related disclosures are aligned with the International Sustainability Standards Board (ISSB) Climate Standard.