Hong Kong sets new climate disclosure rules, aligns with global standard

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Economy1 hour ago (Dec 17, 2020 03:35AM ET)

© Reuters. FILE PHOTO: Ashley Ian Alder, Chief Executive Officer of Securities and Futures Commission and Chairman of the Board of International Organization of Securities Commissions, attends the Asian Financial Forum in Hong Kong

By Alun John

HONG KONG (Reuters) – Hong Kong financial institutions and listed companies will have to disclose the financial impact of climate change on their businesses, as outlined in a major global standard, by 2025, the city’s main financial regulators said on Thursday.

Investors in Hong Kong and around the world say uncertainty about the quality and comparability of companies’ climate-related disclosures limits their ability to make informed decisions.

“We’re trying to create enough commonality and harmonisation to enable investors to be able to discriminate and compare,” Ashley Alder, chief executive of markets regulator the Securities and Futures Commission (SFC) said in an interview.

The change is one aspect of a plan produced by a cross-agency group involving the SFC, the Hong Kong Monetary Authority (HKMA), and government departments aimed at driving green initiatives in Hong Kong and helping the financial hub develop as a sustainable finance centre.

“While Hong Kong as a geographical area is quite small … our international financial centre footprint is huge. If you embed into that footprint the major components of climate finance as it develops, that is of global significance,” Alder said.

Under the proposals, by 2025 companies will have to share information in line with standards set by the Task Force on Climate-related Disclosures (TCFD), a body created by the Financial Stability Board to publish principles to inform investors of climate-related financial risk.

Alder said in some sectors such disclosures would become mandatory earlier.

The TCFD said in October the level of disclosure by companies worldwide was inadequate.

Hong Kong’s plan also says next year the city will adopt a common green finance taxonomy being developed by the European Union and China aimed at promoting the convergence of the two jurisdictions’ systems for assessing how environmentally-friendly companies are.

Hong Kong will also support a separate effort by accounting standards body IFRS to develop a uniform set of sustainability standards, the plan said.

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