Strong El Niño Through Early 2027: Why HKEX Part D Physical-Risk Disclosure Cannot Wait for a Quiet Climate Year

In early September 2026, the World Meteorological Organization (WMO) stated that El Niño is firmly established and is expected to intensify into a very strong event, with forecasts showing an exceptionally high likelihood of nearly 100% that conditions will persist through February 2027. WMO’s August 2026 Update says the same: as of mid-August 2026, El Niño was firmly established; further strengthening toward very strong intensity is forecast before a peak toward end-2026; and ENSO-neutral conditions or a return to La Niña are not anticipated during the outlook period.

The Hong Kong Observatory’s August 2026 ENSO update is aligned in direction. Sea-surface temperatures in the central and eastern equatorial Pacific continued to rise significantly and stayed above normal; the warming trend is expected to continue and develop into an El Niño event in late summer, persisting at least until spring next year; and the event is expected to strengthen into a very strong event, peaking around November and December 2026, with a chance of becoming the strongest El Niño on record since 1950.

Our view: a near-100% WMO outlook that El Niño persists through February 2027 turns HKEX Part D physical-risk disclosure from a distant multi-decade modelling exercise into a near-term stress test of whether issuers can explain short-horizon cash-flow, operations and asset exposure before FY2026 LargeCap climate reports land in 2027.

Problem: What the HKEX issuer faces

Many Hong Kong listed issuers still treat physical climate risk as a long-horizon chapter: sea-level rise, chronic heat and generic “extreme weather” language calibrated to 2030–2050 pathways. That framing is incomplete when WMO describes a firmly established El Niño already expected to become very strong, with climate impacts continuing well into 2027, and when HKO points to a peak around November–December 2026 and persistence at least into spring 2027.

Under Part D of the HKEX Environmental, Social and Governance Reporting Code (Appendix C2), issuers must describe climate-related risks and opportunities that could reasonably be expected to affect cash flows, access to finance or cost of capital over the short, medium or long term, and classify each identified risk as a physical risk or a transition risk. A live, very strong El Niño should force boards to ask whether “short term” in the ESG report still matches the planning horizon used for insurance renewals, construction schedules, logistics buffers and working-capital stress tests.

Part D also requires climate-related scenario analysis to assess resilience of strategy and business model, commensurate with the issuer’s circumstances, including disclosure of scenarios used, sources, and whether they cover physical and/or transition risks. If FY2026 LargeCap packs published in 2027 discuss only generic high-emissions pathways while omitting how a WMO-flagged very strong El Niño informed acute physical exposure, investors will notice the gap between global early-warning language and issuer disclosure language.

WMO is explicit that strength alone does not determine impacts in any individual country or region; effects vary by location and season and can be modified by other drivers, including Indian and Atlantic Ocean conditions. Issuers therefore cannot claim that a very strong El Niño automatically means local disaster, nor can they claim global ENSO alerts are irrelevant to Hong Kong listing disclosure. The task is to show how group risk identification used authoritative seasonal outlooks without inventing local impacts those pages do not state.

WMO links a very strong El Niño to increased likelihood of major shifts in rainfall, temperatures and atmospheric circulation, and associated risks of floods, drought and extreme heat; for September–November 2026 it also indicates increased likelihood of above-normal temperatures across almost all land areas. The governance question is whether board oversight and internal control can connect that seasonal intelligence to physical-risk registers, continuity planning and Part D narrative, especially with Scope 1 and Scope 2 already mandatory for all issuers from FY commencing on or after 1 January 2025, and HSCLI constituents facing mandatory Part D from FY commencing on or after 1 January 2026.

Method: Rules, approach and data

Part D’s strategy pillar asks issuers to identify climate-related physical and transition risks with time horizons linked to strategic decision-making, and to assess resilience using scenario analysis. Metrics expectations include the amount and percentage of assets or business activities vulnerable to climate-related physical risks, subject to implementation reliefs, including reasonable-information and capabilities reliefs where applicable. For autumn 2026, the practical method is to update the physical-risk register with near-term ENSO context, document scenario sources, and keep investor-useful information clearly identifiable.

We cite only verified markers from primary pages:

• Nearly 100% likelihoodThat El Niño persists through February 2027 (WMO press release: “exceptionally high likelihood of nearly 100%”; August Update: “nearly 100% probability” through September–November 2026 and December 2026–February 2027).
• Niño 3.4 anomaliesAbout +1.5°C above normal on average during May–July 2026; +2.0°C in July; weekly values from late July to mid-August approximately +2.2°C to +2.6°C above average.
• Subsurface warmthIn some areas, more than 8°C above average during July and early August.
• Intensity pathFurther strengthening to very strong intensity before peaking toward the end of 2026, with impacts continuing well into 2027.
• September–November 2026 signalsIncreased likelihood of above-normal temperatures across almost all land areas; positive Indian Ocean Dipole expected, September–October–November 2026 seasonal mean value of 0.9°C.
• HKO August 2026Late-summer development; persistence at least until spring next year; very strong peak around November and December; chance of becoming the strongest El Niño on record since 1950; next update in the latter half of September 2026.

We recommend three layers of response:

1. Risk identificationTag assets, sites and critical suppliers by acute pathways (flood, drought, extreme heat, storm-related disruption), stating clearly that local impact magnitude is not a simple function of event strength.
2. Scenario documentationRecord how WMO and HKO seasonal outlooks interact with longer-term Part D scenarios, naming sources and horizons.
3. Financial-effect bridgeConnect short-horizon exposures to insurance, downtime, inventory, logistics, construction delay and heat-driven energy demand, without fabricating loss numbers that primary pages do not provide.

Dual-language Hong Kong packs should keep listing-rule Traditional Chinese terms consistent (環境、社會及管治報告守則, Part D, 範圍一／二, 實體風險, 情景分析).

Citable definitions. El Niño is the warm phase of ENSO, characterised by warming of ocean surface temperatures in the central and eastern equatorial Pacific; WMO notes it typically occurs every two to seven years, lasts around nine to twelve months, and is a natural climate phenomenon not caused by climate change. Climate-related physical risks under Part D and ISSB-aligned standards cover acute event-driven hazards and chronic longer-term shifts. Climate-related scenario analysis assesses resilience of strategy and business model under climate-related changes, developments and uncertainties, commensurate with the issuer’s circumstances.

Implication: Meaning for Hong Kong listed issuers

For HSCLI and LargeCap issuers under mandatory Part D from FY2026, treat the remainder of 2026 as a control-and-update window. Boards should ask for a dated memo mapping WMO/HKO ENSO updates to the physical-risk register; scenario notes naming ENSO-aware seasonal sources alongside longer-term pathways; and a financial-effect draft separating verified climate markers from company-specific exposure estimates still under preparation. Soft “capabilities relief” language will age poorly if peers refreshed physical-risk thinking while WMO issued its first Update so unequivocal on persistence through February 2027.

For other Main Board issuers still on comply-or-explain, “explain” is not a licence to ignore a live ENSO event. Where scenario analysis or physical-risk metrics remain incomplete, specific work plans, progress and timetables matter more than generic system-building language.

For groups with multi-jurisdiction assets, construction pipelines or climate-sensitive supply chains, WMO’s regional-variation warning, including a developing positive Indian Ocean Dipole, argues against a single global sentence such as “El Niño may cause extreme weather.” Show jurisdiction-level risk owners, monitoring cadence and escalation into continuity and insurance forums, and reconcile property or valuation downtime assumptions to the same physical-risk language used in the ESG report.

Issuers with Asian coastal or inland sites need not invent Hong Kong’s exact seasonal rainfall for this event; HKO’s latest ENSO status page does not publish that figure. They do need to show that physical-risk identification, scenario sources and short-term financial-effect language were updated when WMO and HKO flagged a very strong late-2026 peak.

A credible FY2026 Part D chapter will cite WMO and HKO status with dates, separate global probabilities from local claims, show scenario sources and horizons, map acute pathways without overstating precision, and connect governance to risk management and internal control.

Big-number call-outs

• Nearly 100%WMO forecast likelihood that El Niño persists through February 2027.
• Very strong; peak Nov–Dec 2026; chance strongest since 1950HKO August 2026 ENSO latest.
• +1.5°C / +2.0°C / +2.2°C to +2.6°CNiño 3.4 anomalies (May–July average; July; late July–mid-August weekly range).
• Above +8°CSubsurface ocean temperature anomalies in some areas during July and early August.
• 0.9°CExpected SON 2026 seasonal mean value for a developing positive Indian Ocean Dipole.
• 1 January 2025 / 1 January 2026HKEX mandatory Scope 1 and 2 for all issuers; mandatory Part D for prior-year HSCLI constituents.

FAQs

Conclusion

This is near-term ENSO stress, not distant climate colour. WMO’s nearly 100% persistence signal through February 2027 and HKO’s very-strong, late-2026-peak language give Hong Kong issuers a rare, dated external prompt to refresh Part D physical-risk disclosure. The competitive advantage is not repeating the press release. It is showing that scenario analysis, risk registers and financial-effect narrative moved when the climate system did.

Edited / written by: Amanda Cheung, Founder, AMMO Group