ESG Reporting Requirements by HKEX

Why ESG Matters More Than Ever in Hong Kong

Driven by global investors, regulators, and consumers, ESG (Environmental, Social, and Governance) is now a key measure of corporate value and long-term competitiveness. Since 2020, HKEX has progressively tightened its ESG disclosure requirements, pushing companies to not only report, but take concrete action.

For IPO applicants, ESG is no longer a “nice-to-have” branding exercise — it is now:

1. A legal and listing requirement under HKEX rules
2. A decisive factor in investment decisions
3. A prerequisite for IPO approval and post-listing compliance
4. A credential for international supply chain access

In the 2025 May edition of the HKEX New Listing Applicant Guide, ESG disclosure requirements have expanded from 5 items to at least 30. ESG now impacts whether an IPO is successful. Companies preparing to list in Hong Kong must begin ESG preparation well before filing, covering energy, water, greenhouse gases, waste, governance, and social metrics.
 

Core HKEX ESG Disclosure Rules

Fundamental Requirements

1. Mandatory Disclosure Requirements (MDR)
2. “Comply or Explain” principle

Board-Level Responsibilities (since 2020 revisions)

1. Oversee ESG strategy and implementation
2. Assess ESG risks and opportunities
3. Review ESG performance and integrate into decision-making

Additional ESG Requirements for IPO Applicants (HKEX 2025)

The HKEX New Listing Applicant Guide (May 2025) integrates ESG disclosure requirements into multiple IPO prospectus chapters, not just the “ESG” section. ESG-related disclosures now appear in:

1. Risk Factors – Identify and assess ESG-related risks (climate, regulatory, operational) and potential impact on business value.
2. Industry Overview & Applicable Laws/Regulations – Disclose environmental and social standards, compliance with waste management, carbon neutrality goals (e.g., China’s 2060 target).
3. Business – Present ESG strategies, climate transition plans, targets, and progress tracking.
4. Directors & Senior Management – Outline ESG governance responsibilities, board oversight, and integration into corporate strategy.
5. Financial Information – Disclose ESG-related risk impacts on financial position, budgets for ESG initiatives, and any climate-related provisions.
    

IPO companies should prepare:

1. Baseline ESG data (3 years: GHG emissions, water, energy, waste)
2. Governance structures for ESG oversight
3. Materiality assessment aligned with HKEX’s four ESG pillars: Governance, Strategy, Risk Management, Metrics & Targets

The Four ESG Pillars: Basics +  IPO Focus

Environmental (E)

Basic Requirements:

1. Disclose Scope 1 & 2 emissions
2. Energy consumption and efficiency measures
3. Water consumption and conservation
4. Waste management and circular economy initiatives

Emerging Trends & IPO Focus

1. Climate disclosure aligned with IFRS S2
2. Full value chain (Scope 3) emissions accounting
3. Science-Based Targets (SBTi) for emissions reduction
4. IPO disclosure: Quantify GHG, water, energy data for last 3 years; link to compliance plans

Social (S)

Basic Requirements:

1. Employee well-being, diversity & inclusion
2. Occupational health and safety
3. Supply chain management and human rights
4. Community investment and engagement

Emerging Trends & IPO Focus

1. Expanded disclosure on supply chain human rights and environmental risks
2. Quantifiable social impact KPIs
3. IPO disclosure: Labour standards compliance, workplace safety records, supplier ESG screening

Governance (G)

Basic Requirements:

1. Board and management ESG structures
2. ESG risk management framework
3. Anti-corruption and business ethics policies

Emerging Trends & IPO Focus

1. ESG KPIs linked to executive remuneration
2. ESG training at board level
3. IPO disclosure: Board ESG oversight, ESG-linked incentive structures, training records

Climate-Related Disclosure (Aligned with TCFD)

Basic Requirements:

1. Identify climate-related risks and opportunities
2. Develop decarbonization strategies and action plans

Emerging Trends & IPO Focus

1. Full IFRS S2 compliance from 2026
2. Investor demand for measurable emissions reductions and results
3. IPO disclosure: Climate transition plans, quantified mitigation/adaptation measures, timeline to meet carbon neutrality goals

Major global investors (e.g., BlackRock, Norwegian Fund) already require investee companies to meet IFRS S2 or higher ESG disclosure standards. Hong Kong-listed companies that fail to adapt early may lose ground in international financing and supply chain negotiations.

Key ESG Focus Areas for 2025–2026

2025 Highlights

1. Mandatory disclosure of Scope 1 & 2 GHG emissions
2. Climate-related disclosures under “comply or explain”
3. IPO applicants: At least 30 ESG disclosure items across multiple prospectus sections

2026 Highlights

1. Full mandatory IFRS S2 climate disclosure
2. Large-cap constituents of the Hang Seng Composite Index to comply first
3. Anticipated expansion of mandatory Scope 3 emissions disclosure due to strong investor and market pressure

In 2024, a major Hong Kong-listed company adopted the IFRS S2 framework early, disclosing Scope 1, Scope 2, and partial Scope 3 emissions. It integrated climate risks into board decision-making, gaining recognition from international ESG rating agencies and strengthening its position in green finance markets.

Practical Compliance Recommendations

For listed companies:

1. Build robust ESG data management systems to ensure accuracy and audit readiness
2. Conduct regular materiality assessments aligned with stakeholder expectations
3. Adopt international frameworks (GRI, SASB, TCFD, ISSB)
4. Address Scope 3 emissions early to avoid future compliance pressure
5. Seek third-party assurance to enhance credibility and investor trust

For IPO applicants:

1. Start ESG data collection at least 3 years before listing
2. Integrate ESG governance into board structures now
3. Map ESG disclosures to prospectus chapters early in IPO planning
4. Use the same ESG framework for IPO disclosure and post-listing reporting
5. Get independent ESG assurance to boost investor and regulator confidence

ESG reports with inaccurate or unsupported data can harm investment ratings and trigger regulatory scrutiny. Independent assurance significantly reduces these risks.

Services Offered by DQS HK

• EPD Service
• Product Carbon Footprint (CFP) Audit Report for CIC GPC
• EcoVadis Service
• SBTi Service
• CDP Service
• ESG Report Assurance
• ISO 14064  Corporate Carbon Footprint Verification
• ISO 14067 Product Carbon Footprint Verification
• ISO 14040 and 14044 - Review of Life Cycle Assessments