Hong Kong Exchanges and Clearing ( HKEX ) has started implementing disclosure requirements on greenhouse gas ( GHG ) emissions for large-cap companies on a mandatory basis.

Companies listed on the main board of the Hong Kong Stock Exchange must comply with the disclosure requirements for Scope 1 ( direct ) and Scope 2 ( indirect from energy consumption ) GHG emissions in their respective financial reports for the financial year starting on January 1 or later, or explain the reasons for non-disclosure.

The implementation is part of the Hong Kong government’s goal of becoming the first jurisdiction in the region to align local climate-related disclosure requirements with the International Sustainability Standards Board ( ISSB ), the global standards for climate-related disclosure. By aligning Hong Kong’s disclosure requirements with the ISSB, the government hopes to further enhance the city’s status as an international financial centre for sustainability.

The rollout of mandatory compliance with disclosure requirements for Scope 1 and Scope 2 emissions is a step closer to full implementation of the ISSB’s disclosure requirements, which also cover Scope 3 ( indirect emissions across the value chain ). The bourse operator has scheduled the implementation of Scope 3 for January 1 2026.

While most large-cap companies listed in Hong Kong have made significant strides towards readiness, there are still gaps in terms of comprehensive data collection, especially for Scope 3 emissions in supply chains.

In this regard, an industry working group sponsored by the Hong Kong Securities and Futures Commission ( SFC ) has developed a code of conduct for environmental, social and governance ( ESG ) ratings and data product providers.

The voluntary code, launched in October 2024, seeks to address the gap between data collection and standardization particularly in connection with Scope 1 and Scope 2 disclosure requirements.

The code is designed to be closely aligned with the International Organization of Securities Commissions ( Iosco ) recommendations while taking into account the code of conduct developed by the Data and Ratings Working Group ( DRWG ) and supported by the International Capital Markets Association ( Icma ), focusing on applicability to the Hong Kong market.

According to SFC chief executive officer Julia Leung, who also chairs the Iosco Asia-Pacific Regional Committee, the voluntary code of conduct is necessary since the SFC, as well as other regulators, does not have the remit to regulate ESG ratings and data product providers.

“To asset managers, the voluntary code of conduct is a useful tool that you can take into account to facilitate your due diligence and also the assessment of such providers to see if they are up to standard. We have issued a circular encouraging the use the code of conduct or other similar or higher standards in the due diligence process,” Leung says.