Preparing for Mandatory GHG Reporting in Hong Kong: A Practical Guide for Listed Companies
Hong Kong is moving fast toward aligning its ESG disclosure system with global sustainability standards — and one of the most immediate changes is the introduction of mandatory reporting of Scope 1 and Scope 2 greenhouse gas (GHG) emissions starting in 2025.
Under the updated ESG Reporting Code issued by HKEX, all Main Board issuers will be required to disclose their absolute Scope 1 and Scope 2 emissions on a mandatory basis. This marks a significant shift from the previous “comply or explain” approach — and places pressure on companies to rapidly build or upgrade their emissions reporting capability.
What Are Scope 1 and 2 Emissions?
To recap:
- Scope 1 refers to direct GHG emissions from owned or controlled sources (e.g. fuel use in company vehicles, on-site energy generation).
- Scope 2 refers to indirect GHG emissions from purchased electricity, steam, heating or cooling.
While these have long been disclosed voluntarily by leading firms, the new regulations now make it mandatory for all issuers, regardless of size or industry.
Why It Matters
This is not just a compliance exercise. Investors, regulators, and stakeholders are increasingly focused on companies’ climate-related risks and transition strategies. Transparent emissions reporting:
- Helps investors assess climate exposure
- Supports participation in sustainable finance schemes
- Signals credibility in sustainability commitments
- Enables companies to set science-based targets and begin emissions reduction planning
Key Challenges for Hong Kong Companies
Many listed companies, especially mid-sized issuers, have historically lacked robust carbon accounting systems. Common hurdles include:
- Fragmented or incomplete activity data
- Lack of internal carbon accounting expertise
- Manual spreadsheets without audit trail
- Limited understanding of recognised calculation methodologies
Given the 2025 deadline, companies need to move from awareness to action — quickly.
How to Get Started: Four Practical Steps
- Map Your Emission Sources: identify all relevant emission sources across your operations. This includes fuel use, fleet activity, on-site combustion, and electricity consumption across offices, warehouses, retail spaces, and factories.
- Select a Carbon Calculation Framework: use a recognised standard such as the GHG Protocol or ISO 14064-1. Ensure emission factors are regionally appropriate (e.g. using CLP or HKElectric data for Scope 2 in Hong Kong).
- Leverage Technology Where Possible: manual carbon accounting can be resource-intensive and error-prone. Consider implementing AI-powered GHG calculators or ESG software platforms that can automate data capture, conversion, and reporting.
- Establish Internal Controls and Assurance Readiness: start documenting methodologies and sources. Having a structured, reviewable process not only improves data quality but also prepares you for future assurance requirements — which are likely to become mandatory down the line.
What About SMEs or Suppliers?
Even if you’re not a listed company, this matters. Many listed firms are starting to request upstream emissions data from suppliers as part of Scope 3 disclosures or sustainable procurement assessments. Being able to provide credible carbon data will be a key differentiator.
Final Thoughts
GHG reporting is not simply about carbon footprint compliance — it is a gateway to better environmental governance, stronger climate risk management, and readiness for future ESG expectations. For Hong Kong’s listed companies, the time to act is now.
Start by setting up your internal processes — and seek expert support early to avoid last-minute data gaps or reputational risks.
