As the impacts of climate change become more evident, investors and regulators expect companies to disclose climate-related risks and opportunities, and the greenhouse gas (GHG) emissions behind them. Climate disclosure is now required or expected under IFRS S2, the HKEX ESG Reporting Code and Singapore's climate reporting regime. Effective climate risk disclosure management helps organisations prepare for, and reduce, these risks.
A Robust Approach to Climate Risk Disclosure Management
1. Identify Climate Risks
- Physical risks – acute risks (such as typhoons and floods) and chronic risks (such as rising temperatures and sea levels) affecting assets, operations and supply chains.
- Transition risks – risks from the shift to a low-carbon economy, including carbon pricing, regulatory change, technology shifts, market changes and reputational impacts.
- Climate-related opportunities – resource efficiency, low-carbon products and services, new markets and resilience.
2. Assess Climate Impact
- Scenario analysis – model how different climate pathways could affect operations and financial performance over short, medium and long-term horizons.
- Stakeholder engagement – involve internal and external stakeholders to gather insight and build shared ownership of risk management.
3. Develop a Disclosure Framework
- Use recognised standards – structure climate disclosures around IFRS S2, which builds on the four pillars of the Task Force on Climate-related Financial Disclosures (TCFD): governance, strategy, risk management, and metrics and targets. Use the GRI Standards for wider impact reporting, such as GRI 305 for emissions.
- Regular updates – update disclosures regularly to reflect changing risks, opportunities and regulations.
4. Mitigation Strategies
- Investment in sustainable practices – integrate sustainability into strategy and invest in renewable energy and energy efficiency.
- Resilience planning – strengthen resilience to climate impacts through infrastructure improvements and operational adaptation.
5. Monitor and Report
- Track progress – use key performance indicators (KPIs) and targets to monitor climate performance.
- Transparent reporting – provide consistent, comprehensive disclosures to investors, customers and regulators.
GHG Emissions Calculation: A Worked Example
Calculating GHG emissions is essential for understanding and managing your environmental impact, and most sustainability and climate reporting requirements now ask for it. The simplified example below shows the basic method.
Step 1: Define the Scope of Emissions
- Scope 1 – direct emissions from owned or controlled sources (for example, fuel used in company vehicles).
- Scope 2 – indirect emissions from purchased electricity, steam, heating and cooling.
- Scope 3 – other indirect emissions across the value chain (for example, purchased goods, business travel and employee commuting).
Step 2: Gather Activity Data
- Fuel consumption (litres) for vehicles and equipment.
- Electricity use (kWh) from utility bills.
- Employee commuting data (distance travelled and mode of transport).
Step 3: Apply Emission Factors
Emission factors convert activity data into emissions. Illustrative factors for this example:
- Petrol (gasoline): 2.31 kg CO₂ per litre.
- Electricity: 0.5 kg CO₂ per kWh. In practice, use the official grid emission factor for your location and year, as it varies with the energy mix.
Step 4: Calculate Emissions
- Scope 1: 10,000 litres of petrol × 2.31 kg CO₂/litre = 23,100 kg CO₂
- Scope 2: 50,000 kWh of electricity × 0.5 kg CO₂/kWh = 25,000 kg CO₂
- Scope 3: employee commuting, calculated separately = 15,000 kg CO₂
Step 5: Total Emissions
Total GHG emissions = 23,100 + 25,000 + 15,000 = 63,100 kg CO₂ (about 63.1 tonnes)
Real inventories are more complex. They involve boundary-setting, all seven Kyoto greenhouse gases converted to CO₂-equivalent (CO₂e), location-based and market-based Scope 2 figures, and screening of all 15 Scope 3 categories. Updating these figures every year helps you track progress towards targets and stay compliant.
Related reading: How to Evaluate Scope 3 Disclosure Quality · Climate Scenario Analysis
Why Appoint GreenCo for International Sustainability and ESG Advisory?
Since 2016, GreenCo has been trusted by public and private companies and multinational companies for reliable, standards-based ESG and sustainability advisory. We have supported more than 80 listed companies in Hong Kong, Singapore, Mainland China and South Korea, alongside private companies, IPO candidates and multinational groups.
- International standards expertise – GRI, ISSB (IFRS S1 and S2), HKEX and SGX listing rules, the GHG Protocol, ISO 14064 and ISAE 3000.
- All-round, one-stop advisory – strategy, materiality, reporting, GHG accounting, climate risk, ESG ratings, training and assurance under one roof.
- Built from scratch, with you throughout – we can build your ESG framework, data processes and reports from the ground up, and our consultants stay hands-on from kick-off to sign-off.
- Finance-grade rigour – our team combines accounting, investment and risk qualifications, so your ESG numbers stand up to auditors, regulators and investors.
- Professional judgement, with AI as a tool – we use AI and digital tools for efficiency, but every conclusion is reviewed and owned by qualified consultants.
- Assurance capability – assurance services performed by a CPA (Practising) in accordance with ISAE 3000.
Our Team's Professional Credentials
- Fellow Certified Public Accountant (FCPA)
- Chartered Financial Analyst (CFA) – CFA Institute
- Financial Risk Manager (FRM) – Global Association of Risk Professionals (GARP)
- Certified ESG Analyst (CESGA)
- Sustainable Investing Certificate – CFA Institute
- GRI Certified Professional
- Practitioner Member – Institute of Sustainability and Environmental Professionals (ISEP)
- GRI Certified Sustainability Professional – Global Reporting Initiative (GRI)