Hong Kong investors value firms with better sustainability disclosures: ASIFMA

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Adoption of sustainability-related financial information disclosures should be prioritised if Hong Kong is to maintain its market attractiveness: lobby group official

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Martin Choi

Published: 8:30am, 12 Jul 2024

Hong Kong-listed companies that disclose sustainability-related financial information that form part of global baseline reporting standards, are likely to get better valuations in a market that is increasingly integrating sustainability risks into its investment decision-making, according to industry lobby group Asia Securities Industry & Financial Markets Association (ASIFMA).

The sustainability and climate standards released last June 2023 by the International Sustainability Standards Board (ISSB), a body set up during the COP26 global climate summit in 2021 to consolidate various reporting standards, form part of a globally recognised baseline that jurisdictions around the world use to improve the consistency, comparability and usefulness of sustainability disclosures.

Sustainability-driven funds may bypass the city if companies fail to adopt the general requirements for sustainability-related financial information disclosures, known as S1, in Hong Kong as soon as possible, Yvette Kwan, executive adviser to ASIFMA Asset Management Group said in an interview, reiterating a view reflected in the lobby group’s “Adoption of the ISSB Standards in Asia” paper released on Thursday.

“As Hong Kong looks to maintain its market attractiveness and role as a leading sustainable finance hub for the region, adoption of sustainability-related financial information disclosures should be prioritised,” she said.

Such adoption must be made in addition to the climate-related disclosures currently mandated by stock exchange operator Hong Kong Exchanges and Clearing (HKEX) environmental, social and governance (ESG) framework, she added.

Yvette Kwan, executive adviser to ASIFMA Asset Management Group

In April, the HKEX published conclusions from its consultations on the enhancement of climate-related disclosures under its ESG framework. This would include new requirements, based on the ISSB’s climate-related disclosures also known as S2, which would come into effect in Hong Kong beginning in 2025.