LCQ22: Formulating environmental, social and governance standards

During a session of the Legislative Council on July 12, 2023, Mr. Christopher Hui, Secretary for Financial Services and the Treasury (FS), provided answers to a number of questions raised by Parliament members in connection with ESG (disclosure) standards in Hong Kong. These questions primarily related to the establishment, promotion, and education of or on Hong Kong ESG standards and specifically seek to inquire about
(1) a timetable for delivering an own version of ESG standards, particularly in view of the recently published standards by the International Sustainability Standards Board (ISSB);
(2) the development of a „comprehensive ecosystem“ for ESG in Hong Kong, including certifications for certain trades and industries and the cooperation of various stakeholders for purposes of promoting ESG;
(3) the setup of a „cross-bureau working group“ to co-ordinate activities in the ESG field and to promote Hong Kong’s „say“ internationally; and
(4) the setup of education programs so as to foster ESG understanding among the general public.
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Below, there’s a brief summary to questions (1), (2), and (3). For the initiatives as regards education on ESG (question (4)), please refer to the original document.
(1) Just last month, the ISSB published the International Financial Reporting Standards (IFRS) – Sustainability Disclosure Standards. These standards aim to establish a global baseline for companies to disclose climate and sustainability-related information. The Green and Sustainable Finance Cross-Agency Steering Group (Steering Group) in Hong Kong, composed of various financial and regulatory bodies, is considering aligning local requirements with these global standards in a gradual manner.
The Hong Kong Stock Exchange (HKEX) is the first regulatory body seeking alignment with the IFRS standards. Specifically, earlier this year the HKEX released a public consultation, in which it proposed enhancements to climate-related reporting requirements of listed companies in Hong Kong based on the back then draft version of the ISSB sustainability disclosures standards (please see EventID 20823 in this context for more information). The final version of the standards will be built in in the upcoming requirements of listed issuers, so Mr. Hui.
(2) and (3) Several years ago, the Hong Kong government set up the inter-departmental Steering Committee on Climate Change and Carbon Neutrality, chaired by the Chief Executive, with the goal of achieving carbon neutrality in the city by 2050. Since its setup, the Committee has been working on various initiatives like energy conservation, green transport, waste reduction, and regional co-operation on environmental protection.
To accelerate the development of green technology and finance, Mr. Hui announced plans earlier this year to turn Hong Kong into an international center for green technology and finance. The Green Technology and Finance Development Committee, chaired by the FS, was established in June 2023 for this purpose, bringing together leaders from various sectors to promote the growth of green technology and green finance. The Committee is committed to collaborating with the financial sector to address climate and environmental risks, accelerate the development of green and sustainable finance, and implement Hong Kong’s Climate Action Plan 2050. In detail, it is working on mandating climate-related disclosures aligned with international recommendations by 2025 and on establishing a local green green taxonomy for classifying industry activities. Furthermore, the Committee is dedicated to capacity building and data and technology advancements to further promote and develop green and sustainable finance in Hong Kong.