Carbon Credits Guide for Hong Kong Companies

Start with what a carbon credit is

A carbon credit is a tradable unit representing one metric tonne of carbon dioxide or carbon dioxide equivalent that has been avoided, reduced or removed through an underlying project. In voluntary carbon markets, the credit is issued under a crediting programme after the project and its quantified climate outcome have been validated or verified, then tracked in a registry. When the end-user makes the associated claim, the credit should be retired so it cannot be traded or used again.

Use credits as a complement, not the decarbonisation plan

The strongest climate strategy reduces emissions in the company and value chain first. Carbon credits can complement those efforts by addressing unabated emissions during the transition or, for a net-zero end-state, neutralising residual emissions that remain after deep reductions.

This distinction matters. Buying credits does not reduce the company’s reported gross Scope 1, Scope 2 or Scope 3 inventory. A company should therefore keep its gross reduction target, operational decarbonisation programme and any use of credits visibly separate.

• Define the purpose: voluntary contribution, carbon-neutral claim, target support or another use.
• Measure the emissions boundary before choosing the quantity of credits.
• Prioritise direct and value-chain reductions with owners, budgets and milestones.
• Use credits only within a clearly documented claims and disclosure policy.

What Hong Kong listed issuers need to disclose

Where the HKEX ESG Reporting Code Part D climate requirements apply, an issuer that discloses a net greenhouse-gas emissions target must also separately disclose the associated gross emissions target. If the issuer plans to use carbon credits to achieve the net target, it must explain the extent of reliance, the third-party scheme that will verify or certify the credits, the type of credit — including nature-based or technological and reduction or removal — and other factors needed to understand credibility and integrity, such as permanence assumptions.

Assess credit quality before price

Price alone is a poor proxy for quality. HKEX’s 2025 buyer guide highlights project shortlisting and credit selection in the context of the company’s sustainability strategy. Practical due diligence should consider the project type, location, co-benefits, crediting standard, vintage and project-specific risks.

Hong Kong market context

Hong Kong is developing its role in voluntary carbon markets. HKEX launched Core Climate in 2022 as an international marketplace through which participants can source, purchase, settle, hold and retire voluntary carbon credits. The platform includes internationally certified projects and is part of Hong Kong’s wider sustainable-finance and carbon-market development.

Using a marketplace does not remove the buyer’s responsibility to assess whether a particular credit is suitable for its objective and claim. The purchasing decision should begin with the company’s climate strategy, not with the availability of a product.

A practical buyer workflow

1. Confirm the claim and target context. Decide what the credit will and will not be used to support.
2. Quantify the relevant emissions. Reconcile the quantity with the approved inventory and reporting period.
3. Set selection criteria. Project type, geography, standard, vintage, durability, safeguards and co-benefits.
4. Perform due diligence. Review project documents, methodology, verification, registry status and material controversy.
5. Approve and transact. Record commercial terms, ownership and internal approval.
6. Retire and retain evidence. Keep registry retirement records and link them to the claim.
7. Disclose transparently. State what was reduced internally, what was not, how credits were used and any important limitations.

Avoid weak carbon-neutral claims

A claim should identify its boundary, period, emissions covered, reduction actions, quantity and type of credits used, and how the credits were retired. Avoid wording that implies the company has eliminated emissions when it has actually compensated for them using credits.

For a broader control framework, see the Green Claims & Evidence Guide. The safer approach is specific, evidenced wording rather than a broad environmental slogan.