Climate Risk Management Hong Kong

Climate Risk Management in Hong Kong

Hong Kong’s regulatory landscape is rapidly evolving, with climate risk management becoming a critical priority for businesses. The HKEX is set to implement enhanced climate disclosure requirements aligned with the IFRS 2. These changes demand robust climate risk policies, scenario analysis, and financial impact assessments—areas where GreenCo, a leading ESG consultancy in Hong Kong, excels.

HKEX’s Enhanced Climate Disclosures

Effective January 1, 2025, HKEX’s updated ESG Reporting Code mandates enhanced climate-related disclosures aligned with the IFRS S2 Climate-related Disclosures standard. This requires companies to:

• Develop climate risk management policies integrating governance, strategy, and metrics.

• Conduct scenario analysis to assess physical (e.g., extreme weather) and transition risks (e.g., carbon pricing).
• Quantify the financial impacts of climate change on operations, supply chains, and long-term profitability.
• Disclose greenhouse gas emissions, engaging value chains to meet GHG Protocol standards.

Compliance is no longer optional for Hong Kong-listed companies. The Financial Services and the Treasury Bureau (FSTB) has further outlined a roadmap for mandatory IFRS-aligned disclosures by 2028, emphasizing the urgency for businesses to act now.

Why Climate Risk Management Matters

Beyond compliance, proactive climate risk management offers:

• Investor Confidence: Transparent disclosures attract ESG-focused capital and improve valuations.
• Operational Resilience: Proactive measures, such as energy efficiency improvements and supply chain diversification, mitigate disruptions from extreme weather or policy shifts.
• Strategic Advantage: Leading in sustainability enhances brand reputation and market positioning.

Key Challenges for Businesses

Many companies in climate risk management struggle with:

1. Data Collection: Calculating Scope 1, 2, and 3 emissions requires robust systems and expertise.
2. Scenario Analysis: Predicting climate and financial impacts amid variable future conditions demands sophisticated modelling and specialized knowledge.
3. Policy Integration: Embedding climate risks into governance and strategy requires cross-functional alignment.

How GreenCo Supports in Climate Risk Management

GreenCo combines technical expertise, regulatory insight, and innovative tools to help clients navigate these challenges.

1. Climate Risk Assessments
   • Conduct scenario analyses to evaluate physical (e.g., floods) and transition risks (e.g., carbon pricing).
   • Quantify financial impacts to inform strategic decision-making.
2. IFRS S2-Aligned Disclosures
   • Prepare comprehensive reports covering governance, strategy, risk management, and metrics.
   • Ensure compliance with HKEX requirements while aligning with global standards.
3. GHG Emissions Accounting
   • Measure and verify Scope 1, 2, and 3 emissions using the GHG Protocol.
   • Developing customized data collection tools for supply chain collaboration.
4. Capacity Building
   • In-person workshops and short-term secondments to train teams in sustainability reporting.
   • Practical guidance to ensure long-term, independent ESG management.
5. Long-Term Strategy Development
   • Create roadmaps for carbon neutrality and climate resilience.
   • Integrate climate goals into corporate governance and investor communications.

GreenCo’s Competitive Edge

• Specialized Expertise: A multidisciplinary team with certifications in GRI, CFA ESG Investing, and IEMA.
• Proven Track Record: Successfully guided 70+ listed companies in Hong Kong and Asia.
• ISO 9001 Certified: Ensures quality and compliance in all advisory services.
• Local and Global Insight: Deep knowledge of HKEX regulations paired with international best practices.

The Time to Act Is Now

With HKEX’s 2025 deadline approaching, delaying climate risk management is not an option. Companies that proactively address these challenges will not only comply with regulations but also unlock new opportunities for growth and resilience.

Partner with GreenCo to navigate this complex landscape. Our tailored solutions empower businesses to lead in sustainability while meeting stakeholder expectations.

Contact us today to transform climate risks into strategic advantages and secure your company’s sustainability future.