Assessment of climate change reporting practice in capital markets: A review of reporting quality of climate related disclosures across UK, Japan and Singapore listed companies and its implication on Hong Kong and Greater China. ACUNS 2024 Annual Conference Paper.

Abstract

This paper examines the quality of climate-related disclosures among listed companies in the UK, Japan, and Singapore, and explores the implications for Hong Kong and Greater China. As global capital markets increasingly emphasize Environmental, Social, and Governance (ESG) criteria, the Task Force on Climate-related Financial Disclosures (TCFD) framework has become a pivotal standard for climate reporting.

It thus aims to provide practical policy recommendations to enhance climate reporting practices for Hong Kong-listed companies and the Hong Kong Stock Exchange (SEHK). It involves a comprehensive review of climate reporting practices in the UK, Japan, and Singapore, focusing on governance structures, risk management, scenario analysis, and the disclosure of greenhouse gas (GHG) emissions. The findings reveal significant variations in the quality and comprehensiveness of climate disclosures across these jurisdictions. For instance, while the UK shows a higher rate of reporting Scope 3 emissions, Japan and Singapore lag in this area. Additionally, the integration of financial disclosures into climate reporting still needs to be improved, with few companies providing detailed assessments of the economic impacts of climate-related risks and opportunities.

Based on these insights, the paper proposes several policy recommendations. These include mandating the disclosure of Scope 3 emissions, encouraging the integration of financial disclosures into climate reporting, and enhancing the knowledge and expertise of stakeholders through targeted training programs. The study also suggests that SEHK establishes standardized methodologies for estimating and reporting emissions and promotes independent verification of reported data to ensure accuracy and reliability. By aligning with global best practices and addressing the unique challenges Hong Kong-listed issuers face, these recommendations aim to facilitate informed decision-making by investors and stakeholders, ultimately contributing to achieving the United Nations Sustainable Development Goals (SDGs) and the transition to a low-carbon economy.

Keywords: ESG, Sustainability, Captial market, Private Market, SDG goals, Climate Reporting