Hong Kong, a bustling metropolis renowned for its skyscrapers and vibrant economy, is increasingly embracing sustainability as a core business imperative. Since 2015, the Hong Kong Stock Exchange (HKEX) has mandated that all listed companies disclose their ESG performance in their annual reports or through standalone ESG reports. According to recent statistics from the HKEX, compliance with ESG reporting requirements has been steadily increasing, with over 95% of listed companies now disclosing their ESG performance. As companies navigate the complex landscape of environmental, social, and governance (ESG) issues, several key trends are emerging in the realm of sustainability reporting. Let’s dive into three noteworthy trends shaping sustainability reporting in Hong Kong right now:

1. Focus on Climate Change and Green Finance:
   As the global climate crisis escalates, there is a growing emphasis on climate-related risks and opportunities in sustainability reporting in Hong Kong. Companies are increasingly disclosing their carbon emissions, energy consumption, and climate-related risks and strategies, aligning with international frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD). The TCFD aims to “improve and increase reporting of climate-related financial information”, in an effort to implement the requirements of the Paris Agreement. PwC released a report looking at Hong Kong’s sustainability trends. It found that out of the 205 companies in the study 26% disclosed climate-related information related to TCFD framework. 48% disclosed or planned to disclose climate related information in the next one to two years.  Moreover, there has been a surge in green finance initiatives, with Hong Kong emerging as a leading hub for sustainable finance in Asia. From green bonds and sustainability-linked loans to green investment funds and carbon trading platforms, Hong Kong is at the forefront of driving the transition to a low-carbon economy. By integrating climate-related considerations into their sustainability reporting, companies in Hong Kong are not only mitigating climate risks but also capitalising on opportunities to innovate, diversify, and thrive in a rapidly changing world. 
   
   
2. Stakeholder Engagement and Transparency:
   In Hong Kong, there is a growing recognition of the importance of stakeholder engagement and transparency in sustainability reporting. Companies are increasingly engaging with a diverse range of stakeholders, including investors, customers, employees, regulators, and civil society organisations, to inform their sustainability strategies and reporting practices. A 2023 report from PwC looking at the ‘State of Sustainability In Asia Pacific’, found that 54% of companies in their study disclosed ways of addressing stakeholders’ concerns, with the highest found in Hong Kong SAR (72%), Indonesia (70%), and Thailand (70%). Moreover, there has been a push for greater transparency and disclosure, with companies providing more detailed information on their social and environmental performance, supply chain practices, and human rights impacts. By fostering open and transparent communication channels, companies in Hong Kong can build trust, enhance reputation, and create shared value for stakeholders and society. From hosting sustainability forums and stakeholder dialogues to launching online engagement platforms and reporting portals, companies are embracing innovative approaches to stakeholder engagement and transparency, driving positive change and sustainable development in Hong Kong and beyond.
   
   
3. Quality Matters
   The quality of ESG reporting has improved, with companies providing more detailed and comprehensive information on their environmental initiatives, social programs, and corporate governance practices. A survey that looked at 205 companies found that 60% of respondents “have adopted information technology tools to manage and collect ESG data, including ESG reporting tools, internal QA systems and software for environment occupational health and carbon emission management”. This mandatory reporting framework not only enhances transparency and accountability but also drives corporate responsibility and sustainability practices across industries. By requiring companies to disclose their ESG performance, Hong Kong is positioning itself as a leader in sustainable finance and responsible investment, attracting capital from socially conscious investors and fostering long-term value creation.

By embracing these trends and integrating sustainability into their business strategies, companies in Hong Kong can position themselves for long-term success while contributing to a more sustainable and resilient future for the city and the planet.