The Hong Kong Institute of Certified Public Accountants (HKICPA) has unveiled exposure drafts for new sustainability-related and climate-related reporting standards. These proposals, designed to align with the International Financial Reporting Standards (IFRS), are set to take effect in August 2025.

This move follows the Hong Kong government’s earlier "vision statement" on creating a robust sustainability disclosure ecosystem. The government has outlined plans to align local reporting standards with international frameworks, specifically targeting listed companies and financial institutions. A roadmap for this sustainability initiative is expected later this year.

The development of these standards stems from a mandate given to the HKICPA, requiring them to align local reporting rules with the standards established by the IFRS Foundation’s International Sustainability Standards Board (ISSB). Established in 2021 at the COP26 climate summit, the ISSB aims to develop global standards for sustainability reporting, with the inaugural general sustainability (IFRS S1) and climate (IFRS S2) standards introduced in June 2023.

The HKICPA has proposed full convergence of its new standards, HKFRS S1 and S2, with their IFRS counterparts. This decision followed consultations with stakeholders and a technical study on the feasibility of applying the ISSB standards in Hong Kong, completed in June 2024. The institute believes this alignment will strengthen ties between local and global businesses, including those in Mainland China.

HKICPA President Roy Leung emphasized that aligning Hong Kong’s sustainability reporting with global standards will enhance the quality and comparability of sustainability data, benefiting investors seeking reliable information. ISSB Vice Chair Jingdong Hua echoed this sentiment, noting that full alignment would enable investors to better compare disclosures from Hong Kong with global peers.

The HKICPA is currently seeking public feedback on the proposals, with a consultation period open until October 27, 2024.