Hong Kong

YEAR IN REVIEW

(1 July 2024 to 30 June 2025)

Reporting remains a regulatory focus as Hong Kong considers sustainability information aligned with the global ISSB Standards to be a key part of propelling its status as a sustainable finance hub.
Hong Kong became one of the first jurisdictions to align its climate reporting requirements with IFRS S2, with requirements for listed companies taking effect from 1 January 2025.
A pathway has been announced for publicly accountable entities to report sustainability-related (i.e. not just climate-related) information against the ISSB Standards from 2028, starting with large listed companies and financial institutions with a significant weight in Hong Kong.
Requirements on transition planning are expected to move beyond reporting. A policy manual on transition planning for the banking sector and a mandatory EPR scheme for producers of plastic beverage containers are being developed.

Scroll down or click below for further information on each key theme.

PODCAST OVERVIEW

Please click on the podcast above for a snapshot of the three key themes of ESG reporting, transition planning and greenwashing risks in respect of Hong Kong.

KEY CONTACT

Lisa Chung
Partner, Slaughter and May

A. ESG Reporting

1. Are there legal or regulatory requirements for companies to make ESG disclosures in your jurisdiction?

Yes.

2. What are the key legislative and regulatory sources for ESG disclosure requirements and to whom do they apply?

ESG disclosure requirements are primarily aimed at listed companies and financial institutions:

The ESG Reporting Code in Appendix C2 to the Hong Kong Listing Rules (ESG Reporting Code) issued by the Hong Kong Stock Exchange (HKEX) sets out ESG disclosure requirements to be reported on an annual basis by Hong Kong primary-listed companies. The climate-related aspects have been significantly enhanced from 1 January 2025 as outlined in section A.3 below.
The Hong Kong Monetary Authority’s (HKMA) Supervisory Policy Manual contains a Climate Risk Management module (HKMA Climate Module), which includes best practices on climate disclosures by “authorized institutions” (primarily, banks).
Asset managers (licensed by the Securities and Futures Commission (SFC)) of certain collective investment schemes are required to make climate-related disclosures.
Hong Kong-incorporated companies (unless exempted) are required under the Companies Ordinance to prepare an annual directors’ report covering (amongst other matters) its environmental policies, performance and compliance with relevant laws and regulations. However, these requirements are relatively high-level.
At the product level, SFC-authorised (in short, retail) green or ESG funds must include certain disclosures in the offering documents and disclose, at least annually, how the funds have attained their ESG focus. Mandatory Provident Fund (MPF)^[1] trustees of ESG constituent funds are required to include similar disclosures in MPF scheme brochures and annual governance reports.

[1] The MPF system is Hong Kong’s statutory retirement savings system.

3. Are the requirements mandatory or do they apply on a comply-or-explain basis?

The disclosure requirements in the ESG Reporting Code are a mix of both. Disclosures of ESG governance structure and ESG reporting boundary and principles are mandatory. Disclosures of environmental and social aspects under Part C of the ESG Reporting Code are on a comply-or-explain basis. The new climate disclosure rules under Part D of the ESG Reporting Code (HKEX Climate Disclosure Rules) apply in a phased manner as follows:

Scope 1 and Scope 2 emissions: mandatory for financial years commencing on or after 1 January 2025.
Other new climate disclosures (including Scope 3 emissions):

(i) Main Board-listed issuers included in the Hang Seng Composite LargeCap Index^[1] (Large Cap Issuers): comply-or-explain for financial years commencing on or after 1 January 2025 and mandatory for financial years commencing on or after 1 January 2026;

(ii) other Main Board-listed issuers: comply-or explain for financial years commencing on or after 1 January 2025; and

(iii) GEM-listed issuers: voluntary.

While the HKMA Climate Module is not a mandatory guideline, an authorized institution’s non-compliance can potentially be taken into account when assessing whether it has conducted its business with prudence and professional competence. The HKMA expects authorized institutions to make TCFD-aligned disclosures but will take a proportionate approach - depending on factors such as the significance of the authorized institution’s Hong Kong operations, a comply-or-explain approach may be taken, with explanations and plans for future enhancements given.

The other requirements mentioned in section A.2 are mandatory.

[1] An issuer that is a Hang Seng Composite LargeCap Index (HSCLI) constituent throughout the year immediately prior to the reporting year will be considered a Large Cap Issuer. Once an issuer becomes a Large Cap Issuer, it will continue to be treated as such for the purpose of climate reporting, even if subsequently ceases to be an HSCLI constituent.

4. Which aspects of ESG do the requirements focus upon?

For listed companies, environmental, social and governance aspects are all covered, but the focus is on climate.

For financial institutions, the focus is on climate.

5. Are the disclosure requirements based on international standards? If so, which one(s)?

The HKEX Climate Disclosure Rules are substantially based on IFRS S2, and issuers are strongly encouraged to prepare their climate disclosures following the conceptual foundations in IFRS S1.

Authorized institutions are expected to report climate disclosures in line with the TCFD Recommendations (at a minimum).

6. How do the disclosure requirements approach materiality (e.g. single or double materiality)?

“Materiality” is defined in the ESG Reporting Code as “the threshold at which ESG issues determined by the board are sufficiently important to investors and other stakeholders that they should be reported”. This is sufficiently wide to encompass a range of materiality considerations, including financial materiality. For the purpose of the HKEX Climate Disclosure Rules, a single materiality approach is adopted in line with the ISSB Standards (though listed companies can prepare additional disclosures under a double materiality approach if they wish).

The requirements applicable to authorized institutions and asset managers are based on the TCFD Recommendations and therefore adopt a single materiality approach.

7. Are there requirements for the disclosure of GHG emissions? If so, please specify the scope (e.g. Scope 1, Scope 2 and/or Scope 3), to whom they apply and whether there are requirements on the measurement methodology.

Yes.

Under the HKEX Climate Disclosure Rules:

Scope 1 and Scope 2 emissions must be reported on a mandatory basis by all listed companies. Disclosures of Scope 3 emissions are required on a comply-or-explain basis for all Main Board-listed companies, but will become mandatory for Large Cap Issuers with effect from 1 January 2026.
The GHG Protocol must be used as the measurement methodology, unless a different method is required by another jurisdiction or stock exchange.

Authorized institutions are subject to Scope 1 and Scope 2 reporting requirements under the HKMA Climate Module. Large asset managers are required to report on portfolio carbon footprint (Scope 1 and Scope 2 emissions) where data is available or can be reasonably estimated. It is not mandatory to adopt a specific GHG measurement methodology.

8. Are there requirements to obtain independent assurance of any ESG disclosures? If so, what is the scope of such requirements?

Assurance is encouraged, but not mandatory. However, Hong Kong has taken initial steps towards establishing a sustainability assurance regime:

The Hong Kong Institute of Certified Public Accountants published its sustainability assurance standard in March 2025 (HKSSA 5000 - General Requirements for Sustainability Assurance Engagements) which is fully aligned with the International Standard on Sustainability Assurance (ISSA) 5000 - General Requirements for Sustainability Assurance Engagements issued by the International Auditing and Assurance Standards Board; and
The Accounting and Financial Reporting Council is expected to launch a consultation in 2025 on a regulatory framework for sustainability assurance, including the registration of assurance providers, the implementation of assurance and ethics standards, and the establishment of the related regulatory regime.

It is currently unclear whether, and if so, to what extent, mandatory assurance requirements will apply.

9. For companies not subject to mandatory or comply-or-explain ESG reporting, are voluntary ESG disclosures customary?

Some large non-listed entities have issued ESG reports, even though it is not mandatory, and have referenced international standards.

10. Has your jurisdiction issued or adopted a taxonomy on sustainable activities? Is it mandatory and what is its scope of application?

While there is no mandatory taxonomy, the HKMA has issued a local taxonomy (referencing the EU-Mainland Common Ground Taxonomy, amongst other frameworks). The taxonomy currently covers certain activities in the following sectors: power generation, transportation, waste management, and construction.

It was announced in early 2025 that the expansion of the taxonomy is one of three key priorities to foster a sustainable finance market in Hong Kong, with plans to include transition elements and to add new sustainable activities.

11. Are there plans to adopt or incorporate any (other) international ESG reporting framework (e.g. the ISSB Standards and/or the TNFD)? If so, please give details.

Hong Kong has taken a climate-first approach with the introduction of the HKEX Climate Disclosure Rules (which are substantially based on IFRS S2) for listed companies. This is regarded as an interim step towards adopting IFRS S1 and IFRS S2.

In December 2024, Hong Kong issued:

sustainability disclosure standards (HK Standards) that are fully aligned with the ISSB Standards (i.e. both IFRS S1 and S2); and
a Roadmap on Sustainability Disclosure in Hong Kong, which highlighted that Hong Kong will prioritise the application of the HK Standards to publicly accountable entities under a phased approach:

(i) the HKEX will consult the market in 2027 on mandating sustainability reporting against the HK Standards, initially for Large Cap Issuers, for financial years beginning on or after 1 January 2028; and

(ii) financial regulators will seek market feedback on requiring non-listed financial institutions carrying a significant weight in Hong Kong to report against the HK Standards from 2028.

The HKEX has indicated that it will also consider whether and how to upgrade the HKEX Climate Disclosure Rules to a mandatory status for all listed issuers (and not just Large Cap Issuers) when it consults on the adoption of the HK Standards.

The HKMA has encouraged banks to align their disclosures with international frameworks and standards, including the ISSB Standards and the Basel Committee on Banking Supervision’s Pillar 3 disclosure framework for climate-related financial risks, and will undertake a consultation on the adoption of these standards.

In May 2025, a consultation was launched by the Agriculture, Fisheries and Conservation Department on updating Hong Kong’s Biodiversity Strategy and Action Plan. The consultation raised the possibility of encouraging enterprises to take proactive steps in disclosing biodiversity-related risks, dependencies and opportunities. However, there is as yet no specific proposal on this.

12. Other upcoming developments / direction of travel

There will be continued focus on enhancing sustainability reporting requirements. As mentioned, the Hong Kong government has announced a pathway towards adopting both ISSB Standards in a proportionate manner. In light of this, the HKEX has encouraged listed companies to consider early adoption of the ISSB Standards in their sustainability reporting.

Assurance requirements are also expected to come into play, with a forthcoming consultation on this topic.

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B. Transition Planning

1. Has your jurisdiction set decarbonisation targets and strategies?

Yes, to reduce Hong Kong's carbon emissions by 50% before 2035 (compared to 2005) and to reach carbon neutrality before 2050.

The Hong Kong government has outlined four major decarbonisation strategies: “net-zero electricity generation”, “energy saving and green buildings”, “green transport” and “waste reduction”.

2. Are businesses subject to any mandatory carbon pricing or other “polluter pays” instruments (such as ETS, carbon taxes or EPR schemes)? If so, please give details. If not, are there plans to do so?

EPR schemes anchored by the “polluter pays” principle are being progressively introduced. Schemes covering e-waste and glass containers are in place, with legislative proposals underway to cover manufacturers and importers of plastic beverage containers and beverage cartons (with implementation planned for 2026 at the earliest).

The Promotion of Recycling and Proper Disposal of Products (Miscellaneous Amendments) Bill 2025 was passed in July 2025 to establish a common legislative framework for EPRs applicable to different products, facilitating the progressive inclusion of various products in the future.

The HKEX has established a voluntary carbon trading platform, Core Climate, for eligible participants from any sector to purchase, trade and/or retire international voluntary carbon credits.

3. Are there mandatory requirements for companies to have in place and/or disclose climate-related transition plans? If so, please give details. If not, are there plans for such requirements?

There is no mandatory requirement to have a transition plan. However, there are certain disclosure requirements related to transition planning:

The HKEX Climate Disclosure Rules require a listed company (subject to the phased implementation outlined in section A.3) to disclose information about how it has responded to, and plans to respond to, climate-related risks and opportunities in its strategy and decision-making, specifically any transition plan the issuer has, or a negative statement, where it does not have a transition plan. Issuers should also disclose the progress of plans disclosed in previous reporting periods.

There is no mandatory standard on the content of transition plans, though listed issuers should refer to the HKEX’s Implementation Guidance for Climate Disclosures for guidance, illustrative disclosures and further resources.
Under the HKMA Climate Module, authorized institutions are expected to disclose any transition plans they have.

The HKMA has issued some high-level principles to assist authorized institutions to plan for a net-zero transition and a set of Good Practices on Transition Planning. However, there are plans for more robust requirements relating to transition planning for the banking sector. The HKMA issued its Sustainable Finance Action Agenda in October 2024, setting out various goals for banks, including that all banks should:

strive to achieve net zero in their own operations by 2030 and in their financed emissions by 2050; and
tentatively from 2030, make their transition plans available to the HKMA on a comply-or-explain basis. The transition plans should consist of decarbonisation and financing targets, as well as action plans for achieving the 2050 net-zero goal, including a plan for a managed phase-out of financing for carbon-intensive assets.

The HKMA aims to finalise a new Supervisory Policy Manual module on “Transition Planning” in 2025 to set out its expectations on how authorized institutions should manage and address the risks associated with the net-zero transition, including how they should fulfil the net-zero goals mentioned above.

4. Are there mandatory requirements to set, meet and/or disclose climate-related targets? If so, please give details. If not, are there plans for such requirements?

Companies are not required to set or meet climate-related targets. However, disclosure requirements apply to listed companies that have set climate-related targets as outlined below.

The ESG Reporting Code contains requirements for listed companies to disclose (on a comply-or-explain basis) certain environmental targets (emission targets, waste reduction targets, energy use efficiency targets and water efficiency targets) that have been set.

In addition, the HKEX Climate Disclosure Rules require listed companies (subject to the phased implementation mentioned above) to disclose:

any climate-related targets they have set and any targets they are required to meet by law or regulation (including any GHG emissions target);
certain details in relation to each target, e.g. how it aligns with the latest international agreement on climate change and whether it covers Scope 1, 2 or 3 emissions. The planned use of carbon credits to meet any net GHG emissions target would also trigger further disclosures;
information on their approach to setting and reviewing each target, and how they monitor progress, including any third-party validation; and
information about their performance against each of their climate-related targets.

As mentioned in section B.2, EPR schemes are being developed, which will introduce statutory recycling targets for producers of plastic beverage containers and beverage cartons.

5. Other upcoming developments / direction of travel

There are indications that requirements on transition planning are starting to move beyond reporting:

the HKMA plans to issue a new Supervisory Policy Manual module on net-zero transition planning (as mentioned in section B.3);
mandatory EPR schemes are being progressively introduced, impacting producers of certain products (as mentioned in section B.2);
for the aviation sector, a policy whitepaper on a Sustainable Aviation Fuel Strategy for Hong Kong was issued in November 2024. In his 2024 Policy Address, the Chief Executive of Hong Kong announced plans to set a Sustainable Aviation Fuel consumption target within 2025.

Hong Kong is also taking action to promote cleaner fuel. A Strategy on Hydrogen Development in Hong Kong was issued in June 2024. A bill providing for the safe use of hydrogen is going through the legislative process, with subsidiary legislation planned in 2026 to regulate the entire supply chain of hydrogen as fuel. For the shipping sector, the Hong Kong government issued an Action Plan on Green Maritime Fuel Bunkering in November 2024, setting out strategies and actions to develop Hong Kong into a green maritime fuel bunkering centre, which includes plans for tax exemption and other incentives to encourage green maritime fuel adoption.

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C. Greenwashing Risks

1. Are there any recent examples of legal proceedings, regulatory actions or investigations against or into greenwashing in your jurisdiction?

No.

2. Are there any laws or regulations specifically dealing with greenwashing?

No, but some guidance does exist. For example:

the HKMA’s circular on expected standards in respect of the sale and distribution of green and sustainable investment products by registered institutions deals with how registered institutions offering such products should minimise greenwashing risks;
the HKMA has issued a circular on good practices relating to the due diligence processes for green and sustainable products offered by authorized institutions. It seeks to ensure that such products and related funds are managed in a way that is consistent with the authorized institution’s climate strategy, thereby reducing exposure to greenwashing risks;
the SFC has issued requirements on retail green and ESG funds, including on the funds’ names and marketing materials; and the voluntary Hong Kong taxonomy should help to minimise greenwashing risks in the covered sectors.

3. What are the likely grounds on which such proceedings, actions or investigations can be instigated?

Likely grounds include:

disclosure liabilities under securities laws and regulations – for example, for providing materially false or misleading information in listing documents or other corporate disclosure documents, such as ESG reports;
breaches of directors’ duties;
claims in tort for misrepresentation; and
breaches of the Trade Descriptions Ordinance.

There are also risks of regulatory enforcement pursuant to, for example, codes / guidance issued by financial regulators on the marketing of financial products and the Hong Kong Listing Rules’ requirements on ESG disclosures.

4. Other upcoming developments / direction of travel

Although there have been no major greenwashing claims in Hong Kong to date, the risks of claims or regulatory enforcement against companies (in particular, listed companies and financial institutions) are expected to increase as reporting requirements become more robust and Hong Kong seeks to enhance its status as a sustainable finance hub.

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