Preparing for Mandatory Scope 1 and 2 Emissions Reporting in Hong Kong
Starting January 1, 2025, all companies listed on the Hong Kong Stock Exchange (HKEX) will be required to disclose their Scope 1 and Scope 2 greenhouse gas (GHG) emissions. This shift from a "comply or explain" approach to mandatory reporting underscores Hong Kong's commitment to enhancing transparency and aligning with international sustainability standards.
Understanding Scope 1 and Scope 2 Emissions
- Scope 1: Direct GHG emissions from owned or controlled sources, such as company vehicles or on-site fuel combustion.
- Scope 2: Indirect GHG emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting company.debevoise.com
Accurate measurement and reporting of these emissions are crucial for stakeholders to assess a company's environmental impact and for companies to identify opportunities for energy efficiency and cost savings.
Implementation Timeline
- From January 1, 2025: All Main Board and GEM-listed companies must disclose absolute gross Scope 1 and Scope 2 GHG emissions for each financial year.
- From January 1, 2026: LargeCap issuers (constituents of the Hang Seng Composite LargeCap Index) will be required to provide full, mandatory disclosures aligned with IFRS S2.
Steps to Prepare
- Conduct a GHG Inventory: Identify all emission sources within your operations and calculate emissions using recognized methodologies.
- Implement Data Management Systems: Adopt systems to collect, manage, and report emissions data accurately and efficiently.
- Engage Stakeholders: Involve internal teams and external partners in understanding and supporting emissions reduction initiatives.
- Seek Assurance: Consider third-party verification to enhance the credibility of your emissions data.
Conclusion
The mandatory reporting of Scope 1 and Scope 2 emissions represents a significant step in Hong Kong's sustainability journey. Companies should act promptly to ensure compliance, enhance transparency, and contribute to global efforts in combating climate change.
