What Is ESG Reporting In Hong Kong 2025 Guide

Environmental, Social, and Governance (ESG) reporting has become a critical measure of corporate transparency and sustainability, and Hong Kong is raising the bar in 2025. Under the updated HKEX ESG Reporting Code aligned with IFRS S2, all Hong Kong–listed companies must disclose climate-related information, with large-cap issuers required to report Scope 1 and 2 greenhouse gas (GHG) emissions starting this year and full climate disclosures by 2026. These regulations not only ensure compliance with listing rules but also respond to growing investor demand for responsible business practices. For companies operating in Hong Kong, mastering ESG reporting is no longer optional—it’s a strategic move to build trust, attract investment, and secure long-term business growth.

What is ESG?

ESG stands for Environmental, Social, and Governance, a framework used to evaluate how companies manage risks and opportunities beyond traditional financial metrics. Unlike standard financial reporting, which focuses solely on profits and losses, ESG reporting examines how a business operates sustainably, treats its stakeholders, and maintains ethical governance.

• Environmental factors assess a company’s impact on the planet, including carbon emissions, energy and water usage, waste management, and climate-related risks and opportunities.
  
• Social factors focus on relationships—with employees, customers, suppliers, and the community—covering diversity and inclusion, workplace safety, labor practices, and ethical sourcing.
  
• Governance examines leadership, board oversight, internal controls, and compliance with rules, ensuring transparency, accountability, and ethical decision-making.
  

For businesses in Hong Kong, ESG reporting has moved from being a voluntary practice to a regulatory expectation, particularly with the 2025 HKEX ESG Reporting Code aligned with IFRS S2. Investors now view ESG performance as a key indicator of long-term resilience and corporate responsibility, linking sustainability to enhanced investor confidence, better access to capital, and stronger business reputation. In essence, ESG reporting shows how your company makes money responsibly, not just how much it makes.

Key ESG Disclosure Requirements in Hong Kong (2025 Update)

With Hong Kong aligning its ESG reporting framework to global sustainability standards and the IFRS S2 climate disclosure requirements, companies must understand the new expectations for 2025 and beyond. The rules vary depending on the type of issuer, the size of the company, and the scope of emissions to report.

Main Board, GEM, and LargeCap Issuers

• LargeCap Issuers: From 1 January 2025, reporting of Scope 1 and 2 greenhouse gas (GHG) emissions becomes mandatory. By 2026, all other climate-related disclosures, including climate risks and opportunities, will also be compulsory.
  
• Other Main Board Issuers: The “comply or explain” approach applies from 2025 for new climate disclosures. Companies must either meet the requirements or provide a clear explanation for non-compliance.
  
• GEM-listed Companies: Reporting remains largely voluntary, but adoption is encouraged to align with investor expectations and market best practices.
  

Understanding Scope 1, 2, and 3 Emissions

• Scope 1: Direct emissions from company-owned or controlled sources, such as fuel combustion or company vehicles.
  
• Scope 2: Indirect emissions from the generation of purchased electricity, heat, or steam consumed by the company.
  
• Scope 3: All other indirect emissions in the company’s value chain, including suppliers and customer activities. While Scope 1 and 2 are prioritized, Scope 3 disclosure is increasingly scrutinized by investors and regulators.
  

Timeline for Compliance: 2025–2028

• 2025: Mandatory Scope 1 and 2 GHG reporting for large-cap issuers; “comply or explain” for other Main Board companies; voluntary for GEM issuers.
  
• 2026: Full climate-related disclosures become mandatory for large-cap issuers under IFRS S2.
  
• 2028: Hong Kong aims for full adoption of ISSB-aligned standards (HKFRS S1 and S2) for all large publicly accountable entities, ensuring consistency with international ESG reporting standards.
  

By understanding these disclosure requirements and planning ahead, Hong Kong companies can not only meet regulatory expectations but also enhance investor confidence, operational transparency, and long-term sustainability.

ESG Reporting Breakdown: Environmental, Social, Governance

Hong Kong’s ESG reporting framework requires companies to present a comprehensive picture of how they manage environmental, social, and governance factors. Breaking down ESG into E, S, and G helps stakeholders understand both risks and opportunities beyond traditional financial reporting.

Environmental (“E”)

The environmental component focuses on a company’s impact on the planet and how it manages climate-related risks and opportunities.

• Climate Risks and Opportunities: Companies must disclose how climate change could affect their business. This includes potential threats like typhoons, floods, or heatwaves, as well as opportunities from sustainable products, green technology, or energy efficiency initiatives.
  
• Greenhouse Gas (GHG) Emissions Reporting: Disclosure includes:
  
  • Scope 1: Direct emissions from company operations (e.g., fuel combustion, company vehicles).
    
  • Scope 2: Indirect emissions from purchased electricity, heat, or steam.
    
  • Scope 3: Indirect emissions across the value chain, including suppliers and customers. Hong Kong’s large-cap issuers will report Scope 1 and 2 starting 2025, with full climate disclosures by 2026.
    
• Resource Management: Companies should provide information on energy, water, and waste management practices, including targets for efficiency and reduction. This demonstrates responsible use of natural resources and operational sustainability.
  

Social (“S”)

The social dimension assesses a company’s relationships with employees, customers, communities, and its broader supply chain.

• Employee Treatment: ESG reports must cover fair pay, benefits, workplace safety, health programs, and training opportunities. Diversity and inclusion metrics are increasingly expected by investors.
  
• Supply Chain Responsibility: Companies are expected to manage ESG risks across their suppliers, ensuring ethical practices, environmental compliance, and human rights standards throughout the value chain.
  
• Anti-Corruption Policies: Transparency in policies to prevent bribery and corruption is essential. Companies should describe training programs, internal controls, and mechanisms to uphold ethical standards.
  

Governance (“G”)

Governance is the foundation that ensures ESG initiatives are effectively managed and monitored.

• Board Oversight of ESG Topics: Companies must clarify who is responsible for ESG strategy at the board level and how often ESG issues are discussed. Strong leadership demonstrates accountability and strategic commitment.
  
• Risk Management Process: ESG-related risks must be identified, assessed, and addressed systematically. This includes integrating ESG considerations into enterprise risk management frameworks.
  
• Reporting Standards: Hong Kong-listed companies should state which frameworks they follow—such as the HKEX ESG Reporting Guide or ISSB Standards—to ensure transparency, consistency, and alignment with international best practices.
  

By clearly addressing Environmental, Social, and Governance factors in ESG reporting, Hong Kong companies can improve investor confidence, operational resilience, and corporate reputation, positioning themselves as leaders in sustainable business practices for 2025 and beyond.

Why ESG Reporting Matters in Hong Kong

ESG reporting is no longer just a voluntary initiative—it is a strategic necessity for companies listed in Hong Kong. From regulatory compliance to business growth, understanding the importance of ESG reporting can help firms stay ahead in 2025 and beyond.

Regulatory Compliance: Meeting HKEX Listing Rules

The Hong Kong Stock Exchange (HKEX) mandates ESG reporting for all listed companies. Starting 1 January 2025, large-cap issuers must report Scope 1 and 2 greenhouse gas (GHG) emissions, while other Main Board companies follow a “comply or explain” approach. GEM-listed companies may report voluntarily. Non-compliance exposes businesses to regulatory scrutiny and reputational risk, making ESG reporting a key requirement for staying aligned with local and international standards.

Investor Attraction: ESG as a Key Decision-Making Factor

Investors are increasingly evaluating companies based on ESG performance, not just financial metrics. Transparent ESG reporting signals responsible management of climate, social, and governance risks, enhancing investor confidence. Firms that demonstrate strong ESG practices are more likely to attract capital, secure funding for sustainable initiatives, and appeal to both local and global investors seeking long-term value.

Business Advantage: Reputation, Talent, and Efficiency

Beyond compliance and investment, ESG reporting delivers tangible business benefits:

• Brand Reputation: Companies that prioritize sustainability and social responsibility strengthen their public image, fostering trust among customers, partners, and stakeholders.
  
• Talent Acquisition and Retention: ESG-conscious businesses attract top talent, particularly employees who value ethical practices and workplace inclusivity.
  
• Operational Efficiency: Tracking and managing environmental impact, supply chain ethics, and governance processes can reveal opportunities to reduce costs, improve resource management, and mitigate risks.
  

By integrating ESG reporting into corporate strategy, Hong Kong companies not only meet regulatory requirements but also gain a competitive edge, improve resilience against climate and social risks, and position themselves as leaders in sustainable business practices.

Industries Most Affected by ESG Regulations

Hong Kong’s ESG reporting requirements impact certain industries more heavily due to their environmental footprint, social responsibilities, and governance complexities. Companies in these sectors must navigate stricter disclosure rules and investor scrutiny to maintain compliance and competitiveness.

Financial Services: Banks, Insurers, and Asset Managers

Financial institutions play a pivotal role in driving ESG accountability across the economy. Beyond their own operations, they are responsible for assessing climate-related risks in lending, underwriting, and investment portfolios. Investors and regulators expect banks and insurers to disclose ESG performance data and demonstrate a commitment to financing sustainable projects while divesting from high-emission industries.
Key issues: Greenwashing risks, climate risk reporting, sustainable financing practices.

Real Estate & Construction

This sector is a major contributor to Hong Kong’s carbon emissions and resource consumption. Developers and construction firms must disclose energy efficiency measures, the use of sustainable materials, and plans for climate resilience. New ESG rules also require reporting on physical risks such as rising sea levels and extreme weather events, which directly affect property values and operations.
Key issues: Energy-efficient buildings, sustainable materials, climate adaptation strategies, waste management.

Energy & Utilities

As primary energy producers, companies in this sector face strict ESG scrutiny. Emission reductions, renewable energy transitions, and grid management are central to compliance. Reporting Scope 1 and 2 GHG emissions, alongside plans to shift toward sustainable energy sources, is critical for aligning with HKEX’s ESG guidelines.
Key issues: Reducing direct emissions, renewable energy adoption, maintaining grid stability, regulatory compliance.

Manufacturing & Retail

Manufacturers and retailers, especially those with global supply chains, must demonstrate transparency across both environmental and social dimensions. This includes reporting carbon footprints (including Scope 3 emissions), labor conditions, ethical sourcing, and sustainable packaging. Investors and consumers alike demand accountability throughout the entire supply chain.

Key issues: Supply chain emissions, labor practices, ethical sourcing, product and packaging sustainability.

How to Comply with Hong Kong’s New ESG Rules

Complying with Hong Kong’s ESG reporting requirements may seem complex, but breaking it down into a clear, step-by-step approach can simplify the process. From assessing your starting point to publishing your ESG report, here’s a practical nine-step guide for 2025:

Step 1: Assess Your Starting Point

Begin by understanding what the new ESG rules require for your company type and size. Compare these requirements with your current practices to identify gaps. This initial assessment creates a clear roadmap for compliance.

Step 2: Appoint ESG Leaders

Assign responsibility to your board and management team for ESG oversight. Having a designated ESG leader ensures accountability and demonstrates to stakeholders that climate and sustainability issues are taken seriously.

Step 3: Focus on Material Issues

Prioritize the ESG topics most relevant to your business operations and industry. Identify key risks and opportunities across your value chain—from suppliers to customers—to ensure your report highlights the issues that truly matter.

Step 4: Measure Emissions

Calculate your company’s greenhouse gas (GHG) emissions:

• Scope 1: Direct emissions from owned or controlled sources.
  
• Scope 2: Indirect emissions from purchased electricity or energy.
  
• Scope 3: Optional initially, covering emissions across your supply chain.
  Start with Scopes 1 and 2 and plan for Scope 3 disclosures over time.
  

Step 5: Conduct Scenario Analysis

Evaluate how future climate-related events—like typhoons, rising sea levels, or new carbon taxes—could affect your business. Scenario planning helps you anticipate risks and identify potential opportunities in a changing environment.

Step 6: Develop an Action Plan

Set clear ESG targets, timelines, and budget allocations. This roadmap should outline specific initiatives to reduce emissions, improve social performance, and strengthen governance practices, ensuring measurable progress over time.

Step 7: Link ESG to Financial Performance

Demonstrate the financial implications of ESG risks and opportunities. Whether through cost savings, revenue growth, or risk mitigation, connecting sustainability to business outcomes strengthens investor confidence and supports strategic decision-making.

Step 8: Verify Your Data

Engage experts to review and audit your ESG data. Independent verification enhances credibility, reduces errors, and assures stakeholders that your ESG disclosures are accurate and reliable.

Step 9: Publish Your ESG Report

Finalize and publish your ESG report alongside your annual financial statements. Ensure your report clearly communicates your ESG strategy, performance, and commitments, creating transparency for investors, regulators, and the public.

Key Tips for Effective Compliance:

• Start early and gather records from across environmental, social, and governance areas.
  
• Focus on data quality and consistency to build stakeholder trust.
  
• Keep ESG reporting aligned with global standards, such as ISSB (HKFRS S1 & S2) and HKEX guidelines.
  
• Treat ESG reporting as an ongoing process, not a one-time exercise.
  

By following these nine steps, Hong Kong companies can achieve regulatory compliance, enhance investor trust, and leverage ESG as a strategic advantage for long-term growth.

Records You Need to Prepare Your ESG Report

To create a comprehensive ESG report in Hong Kong, companies must gather accurate data from across their operations. These records form the backbone of your disclosures and demonstrate accountability to regulators, investors, and stakeholders.

Environmental Records

• Utility Bills: Track electricity and water consumption to report resource usage and identify efficiency improvements.
  
• Fuel Records: Maintain logs for company vehicles and machinery to calculate Scope 1 emissions.
  
• Waste Invoices: Collect records from waste management providers to disclose disposal and recycling practices.
  
• Environmental Permits & Licenses: Include any permits held for operations that impact the environment.
  

Social Records

• HR Records: Document payroll, employee turnover, training, and diversity metrics to show workforce management and inclusivity.
  
• Health & Safety Logs: Keep track of workplace incidents, accident reports, and safety training sessions.
  
• Supplier Contracts: Ensure suppliers adhere to ESG standards, particularly ethical and environmental clauses.
  
• Whistle-blower Reports: Record incidents and resolutions to highlight anti-corruption and compliance measures.
  

Governance Records

• Board Meeting Minutes: Capture discussions on ESG strategy, climate risks, and oversight responsibilities.
  
• Risk Registers: Maintain logs of identified ESG-related risks and mitigation strategies.
  
• Internal Policies: Include codes of conduct, anti-bribery policies, and other governance documents.
  

By compiling these records systematically, your ESG report will be data-driven, credible, and aligned with Hong Kong’s reporting standards.

Integrating ESG with Your Finances

Aligning ESG reporting with your financial statements is critical for demonstrating the real impact of sustainability on your business performance. Integration offers multiple benefits:

• Enhanced Credibility: Linking ESG disclosures with audited financial statements reassures investors that your sustainability data is accurate and trustworthy.
  
• Operational Efficiency: Consolidating ESG and financial reporting streamlines data collection, reduces duplication, and enables better decision-making.
  
• Strategic Insights: Understanding the financial implications of ESG risks and opportunities helps your company prioritize initiatives that drive long-term value.
  

By integrating ESG with finance, Hong Kong companies not only comply with HKEX requirements but also strengthen their market position, improve stakeholder trust, and support sustainable growth strategies.

Conclusion

ESG reporting in Hong Kong has evolved into a vital tool for transparency, accountability, and sustainable growth. From 2025, listed companies must align with IFRS S2 and the HKEX ESG Reporting Code, covering Scope 1 and 2 emissions and other climate-related disclosures. By preparing detailed environmental, social, and governance records, integrating ESG with financial statements, and addressing sector-specific risks, businesses can enhance credibility, attract investors, and manage long-term operational challenges. Mastering ESG reporting not only ensures compliance but also positions your company for sustainable success in Hong Kong’s dynamic business environment. Contact us today for a consultation!

How FastLane Group Can Help

Navigating Hong Kong’s evolving ESG reporting requirements can be complex, especially with the new HKEX and IFRS S2 standards coming into force in 2025. At FastLane Group, we simplify the process by offering end-to-end ESG compliance and reporting support tailored to your business needs. Our team helps you:

• Assess your ESG readiness by identifying reporting gaps and aligning with HKEX standards.
• Collect and structure key records across environmental, social, and governance areas for accurate disclosure.
• Integrate ESG with financial reporting to enhance credibility and meet investor expectations.
• Develop actionable ESG strategies that go beyond compliance to create long-term business value.
• Provide ongoing advisory support to keep you prepared for future updates, including the 2026 and 2028 disclosure milestones.

With FastLane Group as your partner, you can transform ESG reporting from a regulatory burden into a strategic advantage—building transparency, investor trust, and sustainable business growth. Contact us today for a consultation!

FAQs About ESG Reporting in Hong Kong

Is ESG reporting mandatory?
Yes. All Hong Kong Stock Exchange-listed companies must publish an ESG report, operating on a “comply or explain” basis, with full climate disclosure mandatory for large-cap issuers starting 2025–2026.

Who must comply?
Main Board and GEM-listed companies, with the strictest requirements for large-cap issuers. GEM-listed companies may report voluntarily.

What are the deadlines for ESG reporting?
ESG reports must be published within five months of the financial year-end, alongside the annual report.

What are the penalties for non-compliance?
While no direct government fines exist, the HKEX can issue public warnings or reprimands. More importantly, improper reporting can harm brand reputation, investor confidence, and stock performance.