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As part of overall ESG management, the Board ESG Committee (BESGC) and Board Audit and Risk Committee (BARC) have separate but complementary roles in climate change and other environmental issues.
The BESGC oversees the management of ESG matters, including but not limited to climate-related risks and opportunities, and pursues innovative practices to promote the Group’s sustainable growth. The BARC is responsible for reviewing material risks and corresponding measures. Key risks, including climate change, are reviewed continuously and reassessed by adopting the risk assessment criteria set out in the Group Risk Management Framework. For details on the ESG management structure, please refer to the Governance Structure.
As the risk owner of climate change, the Group ESG Department reports directly to the Executive Director and Chief Financial Officer and manages climate-related strategies at the Group level. This includes managing the Group's greenhouse gas (GHG) inventory; developing and tracking the Group’s Carbon Neutrality Roadmap; ensuring high-quality and timely disclosures of climate-related issues; implementing climate scenario analysis and assessing financial impacts; and monitoring evolving climate-related issues, such as policy change and stakeholder expectations, and developing strategies to respond.
In the transition to a low-carbon economy, we deeply understand the risks associated with a changing climate and have made appropriate provisions for them in our businesses.
These provisions are based on the risks we identified in a comprehensive climate risk assessment in 2015 of our Hong Kong operations under extreme weather events; in 2016, we extended this exercise to our project companies in the Chinese mainland. In 2019, we conducted a gap analysis to better align our climate change management with the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) under Governance, Strategy, Risk Management, and Metrics and Targets.
In 2020, we also assessed our transition risks and opportunities across Towngas’ energy-related businesses in Hong Kong and the Chinese mainland under various climate scenarios. Major transition risks comprise policy changes, reputational impact and shifts in market preferences, including upstream and downstream changes.
Since commencing systematic assessments in 2021, we have continuously conducted physical climate risk identification and analysis for critical assets. Given that climate-related risks primarily arise from long-term environmental changes or low-frequency yet high-impact extreme events, their direct disruption to current operations is not significant. However, the potential impacts should not be overlooked. In this regard, the Group has prioritised the adoption of climate models to forecast future risk trends. On this basis, we have identified assets most vulnerable to extreme weather events, including key assets susceptible to impacts such as extreme temperature, heavy rainfall and water stress.
To mitigate physical risk, we incorporate resilience measures at the planning and design stages. Additional measures to protect our existing operations against climate risks include installing flood gates at our infrastructure and gas facilities, as well as enhancing maintenance and inspection programmes. We also visit our project companies’ sites to identify their regional climate-related risks and to assist them in preparing for adverse weather events. This includes advising them on mitigation and resilience measures, as well as providing training on combating climate change.
We review and update climate-related risks at least once a year to ensure we have adequate capacity to withstand potential risks. We will continue to improve climate-related disclosures, enhance transparency in communication with stakeholders, and safeguard sustainable business growth.
