2024 was the hottest year on Earth since records began. This year, ushered in by ravaging fires in California, promises more of the same.
Climate change is having a real and damaging effect on our environment, just as it is also taking a brutal toll on communities, livelihoods and property worldwide.
Yet, even as these events unfold around us, recent news points to a rollback on climate commitments in some parts of the world.
Coming back from the World Economic Forum at Davos, my biggest takeaway and conviction is that it’s up to all of us – businesses and communities at large – to forge ahead and build the resilience and agility to face these climate challenges head on.
In Hong Kong, corporates have an important role to play in this fight as the city’s government works to achieve carbon neutrality before 2050.
This is a work in progress for some companies in Hong Kong as recent research by consultancy KPMG shows. This is why we at the Hong Kong Exchanges and Clearing (HKEX) want to chart a path forward for issuers and the wider corporate ecosystem by driving sustainable practices across our own operations and setting an example for the wider business community.
We are proud to have reached carbon neutrality, a status a company attains when it removes as much carbon from the atmosphere as its operations and supply chains emit.
We launched our plan in November 2023 when we announced our goal of achieving Group carbon neutrality by 2024 and net zero by 2040 – a decade earlier than we had first anticipated.
On our journey to meet these ambitious goals, we have collected a trove of learnings that can help organisations progress their own green transition paths.
Three takeaways from our carbon journey
Translating ambition into reality requires careful planning and execution, from aligning internally on a goal and baseline to measure progress, to calculating emissions of our own and our wider value chain, to sourcing the right ways and tools to reduce emissions, and, where we can’t reduce, purchasing carbon credits to balance the emissions.
We can distill three key learnings from this process.
First, know your supply chain. Developing emission targets requires a thorough assessment of sourcing methods and the environmental impact of all items in our expense records, from office chairs to hand soap.
Second, understand your objectives. While setting targets is crucial, ensuring they are realistic and adaptable to local conditions is equally important, as we learned when sourcing electricity from renewable sources to meet the needs of our offices.
Third, be agile. One way we offset emissions in 2024 was by purchasing carbon credits for a nature-based project in China, but we may have opportunities to invest in emerging technology-driven solutions like carbon capture in the future, and we will be prepared to take advantage of these innovations when they arrive.
It is here, as we imagine future inventions to bolster our fight against climate change, that we must take stock of what resources are currently at the disposal of companies in Hong Kong.
Ways forward
Our own path to carbon neutrality has pushed us to think even harder on how we can support our issuer community and the city’s broader corporate sector in the same undertaking.
Carbon markets, like Hong Kong’s Core Climate, offer a way forward to carbon neutrality, net zero and beyond, as they connect companies with the carbon credits required to offset their emissions in areas where they cannot reduce, and we are seeing growing interest and participation in these platforms.
To make full use of carbon markets, a company must be able to calculate the emissions produced through their operations and wider supply chain. The growth of Hong Kong’s carbon market is being matched by an ever-widening range of tools and local expertise that will help keep businesses on track.
At a higher level, there is a wider effort here in Hong Kong to lay out a roadmap for companies to enhance sustainability reporting and align with international best practices. Put together, this roadmap has the potential to help Hong Kong take the lead in sustainable finance and HKEX is proud to play our part in helping the ecosystem achieve this goal.
There has never been a better time for companies to step up, put sustainability at the core of their operations and play their part in committing to the climate action that the world needs.
We see a changing world unfolding around us. A world marked by rapidly evolving political sentiment, geopolitical turmoil and a shifting balance of economic power.
But even amid all this change, some constants remain – and one of them is the enduring responsibility corporates hold to drive climate change action. Since coming on board as HKEX’s first chief sustainability officer, I appreciate this now more than ever before.
Investors and customers have higher expectations of corporates of all sizes and sectors to be a positive force in driving the net zero transition. And so they should.
The weather events of recent months show us that climate action can’t wait because climate change won’t.
The cost of failing to act will be staggering – it already is, as we look at the economic and human toll of the climate threats so far this year. As we look ahead, let this be a cause for corporates to rally around and drive forward.
Sustainability is a necessity for the long-term health and resilience of the communities, markets, economies and societies we are connected with. This is our opportunity to cut through the noise and take action to improve the world and address the challenge of climate change head-on.
So let us commit to climate action, invest in innovative solutions and work together across industries and borders.
Together we can create a sustainable future for generations to come. The world is watching, and the time to lead is now.
