Hong Kong’s Sustainability Disclosure Standards: A Guide for the Aviation Sector

HKFRS S1 and HKFRS S2 are the foundational sustainability disclosure standards in Hong Kong, developed by the Hong Kong Institute of Certified Public Accountants (HKICPA).

These standards are fully aligned with the International Sustainability Standards Board’s (ISSB) global baseline: IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) ¹.

This article covers:

• What are HKFRS S1 and HKFRS S2
• HKFRS Key Milestones and Adoption Timeline
• Why HKFRS S1 and S2 Matter for Aviation Stakeholders
• Alignment of HKFRS with Global Standards
• How Aviation Stakeholders Can Prepare

What are HKFRS S1 and HKFRS S2

HKFRS S1 and HKFRS S2 are Hong Kong’s first local sustainability disclosure standards, issued in December 2024 ¹. They are designed to provide consistent, comparable and decision-useful information to investors and stakeholders. Fully aligned with the ISSB’s IFRS S1 and S2, they focus on disclosing sustainability-related risks and opportunities that may affect an entity’s financial position, performance or prospects.

HKFRS S1: General Requirements

• Purpose: Requires disclosure of material sustainability-related risks and opportunities that could impact cash flows, financing or cost of capital.
• Scope: Covers a broad range of environmental, social and governance topics.
• Requirements: Emphasises material, investor-relevant information.

HKFRS S2: Climate-related Disclosures

• Purpose: Focuses specifically on climate-related risks and opportunities.
• Scope: Governance, strategy, risk management and metrics for climate risk.
• Requirements: Includes Scope 1, 2 and eventually Scope 3 greenhouse gas emissions.

HKFRS Key Milestones and Adoption Timeline

Key Events:

• September to October 2024: Exposure drafts issued for consultation
• 12 December 2024: Final standards published ¹

Adoption Timeline:

• 1 January 2025: IFRS S2-aligned climate disclosures apply on a comply or explain basis for Main Board issuers ²
• 1 January 2026: Mandatory disclosures begin for LargeCap issuers
• 1 August 2025: HKFRS S1 and S2 effective for voluntary adoption
• 2027: HKEX to consult on full mandatory sustainability reporting
• 1 January 2028: Full mandatory adoption for large publicly accountable entities, including listed and non-listed financial institutions ^2,3

Why HKFRS S1 and S2 Matter for Aviation Stakeholders

The Hong Kong roadmap places the city among the first jurisdictions in Asia Pacific to align fully with the ISSB Standards, reinforcing the international credibility of its financial markets ².

For aviation stakeholders, this is a significant development:

• Regulatory alignment: Enables compliance with both domestic and international disclosure expectations
• Market access: Helps meet sustainability reporting demands of global investors and financiers
• Reputation and advantage: Signals proactive ESG leadership
• Access to green finance: Enhances eligibility for sustainable funding mechanisms
• Decarbonisation strategy: Supports accurate emissions tracking and net zero planning, including sustainable aviation fuel
• Industry alignment: Strengthens collaboration across the aviation value chain

Alignment of HKFRS with Global Standards

HKFRS S1 and S2 are not standalone frameworks.

They are designed to operate in harmony with existing global standards, allowing companies to streamline reporting, enhance consistency and meet the growing expectations of international stakeholders.

CSRD (Corporate Sustainability Reporting Directive)

• HKFRS Alignment
  HKFRS S1 shares a similar structure with the European Sustainability Reporting Standards through its alignment with IFRS S1. CSRD applies a double materiality lens, while HKFRS focuses on financial materiality. Ongoing collaboration between ISSB and EFRAG is working towards greater interoperability ⁴.
• Relevance for Aviation Stakeholders:
  Aviation firms engaging with EU-based lessors, investors or infrastructure partners may be required to provide CSRD-compatible sustainability data. Alignment with HKFRS S1 supports cross-border comparability.

TCFD (Task Force on Climate-related Financial Disclosures)

• HKFRS Alignment
  HKFRS S2 is structured directly around TCFD’s four pillars: governance, strategy, risk management and metrics and targets ⁵.
• Relevance for Aviation Stakeholders
  Many aviation businesses already use TCFD as a disclosure framework. HKFRS S2 ensures continuity and supports consistent climate risk reporting for investors and regulators.

TNFD (Taskforce on Nature-related Financial Disclosures)

• HKFRS Alignment
  While HKFRS S1 does not currently include nature-related disclosures, future updates are expected to integrate TNFD-aligned requirements ⁶.
• Relevance for Aviation Stakeholders
  Relevant for aviation operators, airports and financiers seeking to understand and disclose biodiversity and land use impacts. Likely to become increasingly important in environmental risk assessment.

SBTi (Science Based Targets initiative)

• HKFRS alignment
  HKFRS S2 encourages disclosure of emissions reduction strategies. Although SBTi targets are not mandatory, they can be used to demonstrate credible decarbonisation plans ⁷.
• Relevance for Aviation Stakeholders
  Supports aviation businesses setting net zero targets, including through fleet upgrades, operational efficiency and sustainable fuel use. Enhances confidence among ESG investors.

How Aviation Stakeholders Can Prepare

• Understand requirements: Map obligations against business structure and operations
• Conduct a materiality assessment: Identify priority ESG and climate risks
• Improve data and controls: Build accurate, auditable systems for emissions and ESG data
• Integrate sustainability strategy: Embed ESG in governance, risk and capital planning
• Build internal capacity: Equip teams with the necessary skills and resources
• Use technology: Leverage ESG reporting platforms and digital tools
• Engage in industry collaboration: Participate in coalitions to share insights and shape policy
• Plan for phased rollout: Prepare a multiyear roadmap aligned with HKFRS milestones

Conclusion

HKFRS S1 and S2 represent a major shift in sustainability reporting in Hong Kong, bringing local disclosure requirements in line with international expectations. For aviation stakeholders, they offer not just a compliance framework but a strategic opportunity to lead in ESG performance, access sustainable finance and build long-term resilience. Early action and proactive planning will be critical to successful implementation and value creation.

References

1. Hong Kong Institute of Certified Public Accountants. (2024). HKFRS S1 and S2 Sustainability Disclosure Standards. Retrieved from https://www.hkicpa.org.hk/en/Standards-and-regulation/Standards/Sustainability/Standards-and-expectations
2. Deloitte China. (2024). Roadmap on Sustainability Disclosures in Hong Kong and HKFRS S1 and S2. Retrieved from https://www.deloitte.com/cn/en/services/audit-assurance/perspectives/roadmap-on-sustainability-disclosures-in-hk-and-hkrfs-s1-and-s2.html
3. IFRS Foundation. (2025). Jurisdictional Profile: Hong Kong SAR. Retrieved from https://www.ifrs.org/content/dam/ifrs/publications/sustainability-jurisdictions/pdf-profiles/hong-kong-sar-ifrs-profile.pdf 
4. European Commission. (2023). Corporate Sustainability Reporting Directive (CSRD). Retrieved from https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting\_en
5. Task Force on Climate-related Financial Disclosures. (2017). Final Recommendations Report. Retrieved from https://www.fsb-tcfd.org/publications/final-recommendations-report
6. Taskforce on Nature-related Financial Disclosures. (2023). Recommendations. Retrieved from https://tnfd.global/recommendations/
7. Science Based Targets initiative. (2024). Science-Based Target Setting for Financial Institutions. Retrieved from https://sciencebasedtargets.org/