How to Achieve Carbon Reduction and Net Zero

Know the Hong Kong context — but set a company-specific pathway

Hong Kong’s Government is striving to achieve carbon neutrality before 2050 and has an interim target to reduce Hong Kong’s total carbon emissions by 50% before 2035 compared with 2005. Its four major decarbonisation strategies are net-zero electricity generation, energy saving and green buildings, green transport and waste reduction.

A corporate target is different from a city-wide target. A company should set its own boundary, baseline, time horizon and reduction pathway based on its emissions profile, sector, assets, value chain, contractual arrangements and capital cycle.

1. Build a controlled greenhouse-gas baseline

Reduction starts with knowing where emissions actually arise. Establish organisational and operational boundaries, document calculation methods and evidence, and quantify Scope 1 and Scope 2. Screen all relevant Scope 3 categories and improve the material ones progressively.

2. Set targets that management can govern

Separate near-term operating targets from the longer-term net-zero ambition. State the baseline year, scopes and gases covered, whether the target is absolute or intensity-based, whether it is gross or net, and how progress will be reviewed.

For Hong Kong listed issuers subject to the relevant Part D requirements, target disclosure also covers the approach to setting and reviewing the target, progress, any revisions, scope coverage, whether the target is gross or net, and planned use of carbon credits for a net target.

3. Prioritise reduction levers by emissions and decision cycle

4. Turn initiatives into a funded roadmap

For each priority initiative, record the emissions source, expected reduction mechanism, owner, implementation date, capital or operating cost, dependencies, evidence and monitoring KPI. Then sequence actions around lease renewals, equipment replacement, procurement cycles and major capital decisions.

A marginal-abatement-cost curve can be useful where data supports it, but the objective is not to produce a decorative chart. The roadmap should show which decisions management will actually take, when, and how they will be funded.

5. Treat Scope 3 as a value-chain programme

Many Hong Kong-headquartered groups have relatively modest local operational emissions but large value-chain footprints across manufacturing, logistics, purchased goods, leased assets, investments or product use. Reduction therefore requires procurement and business teams, not only the sustainability function.

• Prioritise suppliers or categories by emissions and business importance.
• Standardise data requests and calculation expectations.
• Add environmental requirements to procurement and contract processes.
• Engage strategic suppliers on reduction projects rather than requesting data once a year.
• Track primary-data coverage and actual reductions separately from estimation improvements.

6. Use carbon credits after reduction planning

Carbon credits can address unabated emissions during transition, but they should not be used to disguise a weak gross-reduction pathway. For a net-zero end-state, residual emissions should be clearly identified and the role of removals explained. See the Carbon Credits Guide for buyer and disclosure controls.

7. Review performance as part of normal management

Update the inventory, compare actual performance with the target trajectory, explain significant movements, reassess the business case and revise the roadmap when assumptions change. Management review should connect emissions performance with energy bills, procurement, capex, risk, asset plans and financial forecasts.