Page 52 -

52 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2020 PROTECTING THE ENVIRONMENT 53

at these facilities in 2020 as a follow-up measure. Scenario Development
Climate-related Financial Disclosures
These enhancements are designed to withstand the
worst case scenario (based on IPCC Representative In our assessment, we referenced the scenarios presented by the International Energy Agency’s (IEA) World
Many more stakeholders today, including investors,
are examining how companies are reducing their Concentration Pathway 8.5) for flooding in this century. Energy Outlook 2019. We also factored in the pace of technological development and adoption, as well as the
climate impacts. At Towngas, our implementation of stringency of new policy implementations, in order to identify four scenarios as shown in the table below:
the Recommendations of the Task Force on We also renovated and upgraded the back-up
Climate-related Financial Disclosures (TCFD) Corporate Crisis Control Centre to strengthen Towngas’ Scenario Description
helps us become more climate resilient and increase emergency preparedness against adverse weather. We
transparency for our stakeholders. are also planning to initiate another in-depth physical
risk assessment to better understand climate risks. 1. Best of Both Worlds Similar to the IEA’s Sustainable Development Scenario (SDS).
o
In 2019, we began a study on how to align ourselves (rise well below 2 C)
with the Recommendations of the TCFD and carried out Bold emissions reduction targets are met through 1) new/alternative
a gap analysis to examine Towngas’ current practices technologies, 2) efficiency improvements, 3) government policies.
against these recommendations. We have since Demand for natural gas peaks around 2035. In 2040, renewables replace
disclosed relevant information according to the four coal as the main source of energy in mainland China: renewables (34%),
thematic areas outlined in the TCFD. coal (28%), oil (14%), natural gas (13%), nuclear (11%).

Governance 2. Marathon to Similar to IEA’s SDS, but with a less optimistic assumption for technological
• Managing ESG at Towngas Compliance development and adoption.

Governments take the lead and consider meeting climate and environmental
goals to be the highest priority in their policy making process. Consumer
Strategy choices are limited; business and industrial activities are taxed and regulated.
• Transitioning to a Low-carbon Climate Transition Risks
Future and Resilience 3. Climate is Business Similar to IEA’s Stated Policies Scenario (STEPS).
• Climate Change and Air Quality According to the Recommendations of the TCFD,
companies are advised to carry out a detailed analysis Governments take a back seat in climate and environmental policies.
Risk Management of various climate-related scenarios to determine their Carbon emissions slow down due to some uptake in renewables and
• Climate Risks and Opportunities risk exposure and stress test their climate resilience efficiency gains, but there is no peak in global energy-related carbon
• Risk Management strategies under such scenarios. emissions.

During 2020, we conducted a comprehensive 4. Hothouse Earth Similar to IEA’s Current Policies Scenario (CPS).
Metrics and Targets assessment of the transition risks and opportunities (rise of 4 C,
o
• Our Carbon Footprint across our energy-related businesses in Hong Kong business-as-usual Governments do not follow up on climate-related commitments; fossil fuel
• Carbon Emissions along and mainland China under various climate scenarios. scenario) subsidies continue, hampering the uptake of renewable energy.
Our Value Chain
By deepening our understanding of how policy Demand for natural gas increases by over 140% in 2040 as compared with
Climate Physical Risks and Resilience changes, developments in technology, reputational 2018. Coal continues as the main source of energy (46%) in 2040, followed
impacts and shifts in market preferences could have by oil (20%), renewables (15%), natural gas (13%) and nuclear (6%).
We conduct ongoing physical risk assessments and a significant impact on our businesses, both positively
management exercises to ensure we will remain and negatively, we are able to develop plans to mitigate
resilient in years to come. In 2019, we conducted a risks and build resilience strategies.
study on flooding hazards related to sea level rises
that could affect critical facilities, including the switch
room, generator room and fuel tank room at our
North Point headquarters. Flood gates were installed