Upcoming Regulations on Mandatory Sustainability Assurance

In December 2025, the Accounting and Financial Reporting Council (AFRC) published a consultation paper on proposing a regulatory framework for sustainability assurance in Hong Kong (“Framework”). In supporting of the HKSAR Government’s Roadmap on Sustainability Disclosures, the proposal allows companies in Hong Kong to apply international standards for high-quality assurance to enhance credibility and reliability of sustainability disclosures, driving Hong Kong to be a green financial hub.

Proposed plan on the Framework:

Proposal 1: Entities required to obtain independent assurance

For entities required to report using the Hong Kong Financial Reporting Standards (HKFRS) Sustainability Disclosure Standards (Mandatory HKSDS Reporting), independent assurance must be obtained.

Large publicly accountable entities (PAEs) will be prioritised to apply the HKSDS under a phased-in approach. Large Cap Issuers and large non-listed financial institutions carrying a significant weight in Hong Kong will fully adopt the HKSDS no later than 2028.

Proposal 2: Scope and timing of mandatory assurance

Limited assurance must be obtained, where:

• Scope 1 and 2 greenhouse gas (GHG) emission disclosure from the third financial year of the Mandatory HKSDS Reporting; and
• All remaining disclosures mandated under HKSDS from the fifth financial year of the Mandatory HKSDS Reporting.

Proposal 3: Assurance providers to be registered

Mandatory assurance must be provided by registered sustainability assurance providers (SAPs) and their registered individuals, comprising either:

• Registered local public interest entity (PIE) auditors that meet additional criteria; or
• Accredited local non-certified public accounting (non-CPA) firms that meet similar criteria.

Registration criteria for individuals in key responsible roles, along with accreditation programme for non-CPA firms, will be established.

Proposal 4: Assurance standards to be prescribed

Mandatory assurance must be complied with the Hong Kong Standards on Sustainability Assurance 5000, with the application of:

• Hong Kong Standard on Quality Management 1; and
• Hong Kong Ethics Standards for Sustainability Assurance.

Proposal 5: A single regulator for all assurance providers

For clear accountability and robust oversight, a single regulator model is set up to:

• Register and regulate all SAPs and their registered individuals; and
• Oversee relevant standard-setting by the Hong Kong Institute of Certified Public Accountants (HKICPA).

Relevant consultation is nearly ended, and feedback can be provided by 30 March 2026. Although details relating to the implementation of the Framework are still undergoing discussion, listed companies are subject to sustainability assurance in the upcoming years. To get prepared in advance, particularly the Mandatory HKSDS Reporting, it is important to clearly define the reporting scope and account Scope 1 and 2 GHG emissions with internationally recognised and structured methodologies.

GreenCo’s Perspective: A Turning Point for ESG Reporting

With over a decade of experience supporting more than 70 listed companies in ESG reporting, we strongly welcome the proposed introduction of mandatory sustainability assurance.

In the early stages of ESG reporting, disclosures were often treated as a compliance exercise, focused on completing checklists rather than delivering decision-useful information. Data quality, internal controls, and verification processes were sometimes overlooked, leading to inconsistencies and limited stakeholder confidence.

We believe the introduction of assurance requirements marks a critical turning point. By subjecting ESG disclosures to independent verification, companies will be encouraged to strengthen their data management systems, governance structures, and internal accountability. This will not only enhance the credibility and transparency of reported information, but also significantly improve its value to investors and other stakeholders.

Over time, we expect ESG information to evolve toward a level of rigor and reliability comparable to financial reporting. This shift will elevate the role of sustainability within organisations, from a peripheral reporting function to a core component of strategic decision-making, while also strengthening market trust and driving more informed capital allocation.

At GreenCo, we are committed to supporting this transition. Leveraging our extensive experience in carbon accounting and ESG reporting aligned with international standards, we help companies build robust, assurance-ready disclosure frameworks. As regulatory expectations continue to evolve, we stand ready to guide our clients in enhancing both the quality and credibility of their sustainability disclosures. Contact us today to enhance your transparency and credibility of sustainability disclosure!

For the Full Publication on the Consultation Paper on the Proposed Regulatory Framework for Sustainability Assurance in Hong Kong, please visit: https://www.afrc.org.hk/media/bvadgtpj/afrc-consultation-paper-on-sustainability-assurance-en.pdf

For detailed information on the Roadmap on Sustainability Disclosures in Hong Kong, please visit https://www.fstb.gov.hk/fsb/en/publication/report/docs/FSTB_Roadmap2024_eBooklet_EN.pdf

GreenCo is a professional ESG advisory firm accredited with ISO 9001 in the Provision of ESG / Sustainability Reporting, Sustainanbility and Climate Disclosures and GHG Accounting Advisory Services. Established in 2016, we were born to tackle ESG and climate risk management challenges. GreenCo has a professional team consists of talents with multiple backgrounds with

• PhD
• Practitioner Member of the Institute of Sustainability and Environmental Professionals (ISEP)
• CFA (the CFA Institute) and Certificate in ESG Investing
• EFFAS Certified ESG Analyst (CESGA)
• GRI Certified Sustainability Professional
• Certified Public Accountant (for assurance in accordance with ISAE 3000)
• Member of Global Association of Risk Professionals
• Master’s degree in envirnomental science

GreenCo has solid track record in ESG advisory for over 70 listed companies in Hong Kong, Mainland China, Singapore and Korea, covering all industries under the Hang Seng Industry Classification System.