Hong Kong Proposes Fully IFRS-Aligned Sustainability Reporting Standards
The Hong Kong Institute of Certified Public Accountants (HKICPA) has announced the publication of new exposure drafts for sustainability-related and climate-related reporting standards. These proposed standards, known as HKFRS S1 and HKFRS S2, are fully aligned with the International Sustainability Standards Board (ISSB) standards issued by the IFRS Foundation.The HKICPA aims to have these standards effective from August 2025. This move follows the Hong Kong government's vision statement on developing a sustainability disclosure ecosystem, which seeks to align local sustainability reporting requirements with international standards. The proposed standards will apply to entities including listed companies and regulated financial institutions such as banks, fund managers, and insurance companies. The HKFRS S1 standard covers general requirements for the disclosure of sustainability-related financial information, while HKFRS S2 focuses on climate-related disclosures. By aligning with the ISSB standards, the HKICPA aims to enhance consistency and comparability of corporate sustainability reports, meeting the needs of investors seeking reliable sustainability information.
HKICPA President Roy Leung emphasized the importance of these standards in aligning Hong Kong's sustainability reporting with the global baseline. He stated that this alignment would bolster the connection of global capital with local businesses and those in Mainland China and other regions.
The ISSB Vice Chair Jingdong Hua also commented on the proposal, highlighting that full alignment with ISSB standards would enable investors to compare disclosures from Hong Kong companies with their peers around the world. The HKICPA will host a public briefing on January 16, 2025, to explain the development journey of HKFRS S1 and S2 and their impacts on Hong Kong entities. The institute will also provide implementation support through FAQs, an implementation support platform, and capacity-building initiatives.
For more information, please visit https://www.esgtoday.com/hong-kong-proposes-fully-ifrs-aligned-sustainability-reporting-standards/
How ESG is Measured in Valuations and the Role of Enhanced Green Technology
In today's business landscape, Environmental, Social, and Governance (ESG) factors are crucial in determining a company's valuation. Investors increasingly value sustainable practices, recognising that companies with strong ESG performance are better positioned for long-term success.Valuation practitioners now integrate ESG factors into financial assessments. Recent revisions to international standards mandate considering ESG elements, highlighting the importance of ESG due diligence in capturing risks and opportunities. Innovations like renewable energy systems, energy-efficient designs, and smart grids are transforming industries. Companies adopting these technologies not only contribute to environmental conservation but also improve operational efficiency and profitability.
Companies with robust ESG practices and advanced green technologies often command higher valuations. Investors recognise these companies are better equipped to manage risks, comply with regulations, and capitalise on market opportunities, leading to improved brand reputation and customer loyalty.
In conclusion, integrating sustainable practices and green technologies boosts a company's ESG performance and valuations, ensuring long-term competitiveness and success. Companies must adapt to meet investor and stakeholder expectations in an evolving global market.
For more information, please visit https://hongkongbusiness.hk/commentary/how-esg-measured-in-valuations-and-how-enhanced-green-technology-helps-companies-purpose
Hang Seng Indexes Launches Hydrogen Energy Index
Hang Seng Indexes Company (HSIL) has introduced the Hang Seng Stock Connect Hydrogen Energy Index, a new benchmark reflecting the performance of companies involved in the hydrogen economy. This cross-market ESG-themed index tracks companies engaged in the production, transmission, distribution, and storage of hydrogen.Hydrogen, recognised as an efficient and clean fuel, plays a crucial role in the global energy transition by reducing greenhouse gas emissions. The index includes companies listed in Shanghai, Shenzhen, or Hong Kong, and is calculated and disseminated in real-time at two-second intervals. Anita Mo, CEO of HSIL, highlighted the index's alignment with the growing interest in sustainable investment strategies. The launch aims to help investors capture opportunities arising from the low-carbon transition.
The Hang Seng Stock Connect Hydrogen Energy Index is part of HSIL's commitment to addressing rising investment interest in sustainability since 2010. It supports decarbonisation-minded investors and contributes to the global effort to achieve carbon neutrality.
For more information, please visit https://hongkongbusiness.hk/markets/news/hang-seng-indexes-launches-hydrogen-energy-index