Driving Change: Climate Disclosure of Hong Kong Listed Companies in Key Sectors and the Road Ahead

In April 2024, HKEX published its Conclusions on Climate Disclosure Requirements, enhancing climate-related disclosure requirements for listed companies to align with International Financial Reporting Standards (IFRS) S2 Climate-related Disclosures. These requirements became effective in January 2025, asking companies to make more granular disclosure of their governance, strategy, risk management, and metrics & targets for climate-related matters.

Riding on the implementation of these new requirements, this paper re-emphasised the “virtuous circle” between disclosure and transition, with a focus on six sectors that shape our everyday lives, including Apparel, Food & Beverage, Home Products, Hospitality, Logistics, and Transportation & Automobile. As these industries operate with complex, multifaceted supply chains, they present distinct challenges and opportunities as they undergo the low-carbon transformation.

Companies we talked to realise the importance of embedding sustainability in their business operations, but often they lack sufficient industry knowledge and resources to drive meaningful actions to collect data, not to mention setting realistic carbon reduction targets and transition plans. It is our goal to support companies’ decarbonisation strategy development and achieve net zero targets together.

Raymond Ng, Head of Clients and Markets, Hong Kong at KPMG China

Effective decarbonisation and sustainable business practices can play a crucial role in long-term value creation. Companies that integrate ESG principles into their core strategies could better position themselves to meet the evolving expectations of investors and society.

Daisy Shen, Head of Environmental, Social and Governance (ESG), KPMG China

Our findings reflected major gaps in data, knowledge, and finance within three key areas: (1) GHG disclosure, (2) carbon reduction target setting, and (3) transition planning. In addition, our engagements with sector experts and corporate leaders have broadened our understanding of sector-specific decarbonisation journeys, including challenges and strategies.

The missing link: more than half of companies are still silent on Scope 3 emissions.

Targets misaligned: majority of companies lack science-based targets.

A call to action: companies need comprehensive transition plans.

Consumers are increasingly demanding sustainable products and services, driving companies’ decarbonisation efforts. Companies that align their business models with consumer values and prioritise environmental responsibility will not only meet market demands but also gain a competitive edge in the evolving consumer landscape.

Alice Yip, Head of Consumer & Retail, KPMG China

Looking forward

Effective decarbonisation requires three key elements: accurate data, comprehensive knowledge, and adequate financial support. Our findings and analysis indicate that all three elements have gaps to bridge: a data gap concerning Scope 3 emissions profile, a knowledge gap in establishing effective targets and transition plans, and a financial gap needed to execute those plans:

The recent shift towards new requirements for climate-related disclosures is set to bring about a significant change in how companies disclose their climate data. This move could lead to more comparable climate-related disclosures, addressing the inconsistencies that have long plagued the industry.

Even though our observation shows that the current challenges are more towards Scope 3 data gaps, we can expect these gaps to gradually narrow with large-cap companies being mandated to disclose their Scope 3 emissions. With the availability of more data, companies will have less leeway to avoid target setting and progress tracking, leading to a more accountable and transparent approach to fulfil their environmental responsibilities.

The convergence of more accurate data disclosures, science-based targets, and the anticipated capital needs for decarbonization will become a reality as companies continuously seek to unlock the full potential of sustainability-led business transformation.

On the other hand, we believe the financial market would welcome high-quality climate reporting. Climate-related data and transition-related insights would mark a significant advancement in the valuation and risk assessment process.

For companies, now is the time to transform challenges into opportunities. By proactively bridging data and knowledge gaps, they will be able to attract greater capital support for new initiatives, driving effective transitions and ensuring sustainable long-term growth.

The virtuous circle of decarbonisation journey:

Consumers are increasingly demanding sustainable products and services, driving companies’ decarbonisation efforts. Companies that align their business models with consumer values and prioritise environmental responsibility will not only meet market demands but also gain a competitive edge in the evolving consumer landscape.

Irene Chu, Partner, ESG Reporting Lead, Hong Kong, KPMG China

About this paper

Our analysis begins with a review of HKEX's ESG reporting requirements, navigating the evolving landscape of disclosure trends and the commitments of listed companies in Chinese mainland and HKSAR to environmental stewardship. 48 HKSAR-listed consumer goods companies were selected for desktop analysis, complemented by expert and business leader interviews to distil decarbonisation insights and identify best practices.

Through in-depth analysis, KPMG and DBS Hong Kong strive to leverage our banking and advisory expertise to uncover the research findings.