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54 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2020 PROTECTING THE ENVIRONMENT 55

Impact Analysis and Strategic Resilience Policy and Legal Risk Market Risk Technology Risk Reputation Risk

By acknowledging the Best of Both Worlds and Marathon Short to Medium Term Medium to Medium to Long Term
to Compliance as possible scenarios towards a low-carbon 2020-2030 Long Term Long Term 2030-2040
economy, we have identified transition risks for Towngas 2025-2040 2025-2040
according to TCFD’s risk categorisations: market risk, • Hong Kong and mainland China’s 2050 and • Demand for natural gas increases • Replacing existing technologies
technology risk, policy and legal risk, and reputation risk. 2060 goals of carbon neutrality are expected in the short and medium term as a and processes leads to higher • Shareholders are likely to divest
from fossil fuels.
The tables to the right summarises the potential risks and to accelerate the transition towards a low- transition fuel, and may drop over capital and operating costs.
opportunities, impacts and resilience strategies for Towngas’ carbon future; increasingly stringent climate the long term. • Open and tr anspar ent
portfolio across different time horizons. and environmental policies mean that carbon • Increasing risk that town gas and • Low or zero carbon technologies communication/disclosure on
intensive operations, products and services will natural gas will be replaced with are substituted for existing products issues of climate change will
be heavily regulated. low or zero carbon alternatives; and services, affecting our gas- benefit us in terms of increased
Although the study shows the resilience of our portfolio, there revenue from gas sales will related businesses. capital availability, especially for
are still areas of improvement in our portfolio and strategy. • This may have a negative financial impact increase in the short and medium Towngas’ green businesses.
term but may fall over the long
To further enhance our climate resilience, Towngas will keep on Towngas (e.g. higher compliance costs, term. • Development of waste-to-energy
products and smart energy projects
up with policy developments and watch for any early warning reduced gas sales revenue). present opportunities.
signals to ensure we are well prepared. We will also drive • Potential for revenue from low-carbon products • Development of new products and
services will increase Towngas’
sustainability-related consumer education and brand messaging and services (e.g. biofuels). competitiveness, resulting in
to communicate Towngas’ position in the transition to a low- increased revenues.
carbon economy, as well as develop a strategic plan with
investments in innovative green technology that helps us to
gradually transform into a sustainable energy company.

Towngas’ Align with government policies Reduce direct GHG Explore low-carbon business Support research and
opportunities
emissions
development (R&D)
Climate Resilience Mainland China’s environmental policies have been driving a faster Towngas has been focusing Diversification has helped Towngas Towngas has research and
Roadmap uptake of natural gas to replace relatively more polluting forms of on reducing emissions from its gradually transform into a multi- development centres in
Shanghai city and Suzhou city,
business corporation focused on
operations by utilising low-carbon
fuel, especially coal, as a source of energy.
sources of energy and improving environmentally friendly energy where we are developing clean
Towngas is well positioned for the short and medium term, as energy efficiency. We will continue ventures, which reduces our exposure energy technologies, including
we have a large market share in Hong Kong and an expanding to explore opportunities for to transition risks. self-developed patented
gas network in mainland China for natural gas. We also support increasing the use of biogas in the technologies that are being
commercial and industrial customers to switch from coal/diesel to production of town gas. For example, Towngas is developing utilised in different projects.
natural gas/landfill gas. smart energy and waste-to-energy We are now applying these
For more details, please refer to businesses. technologies commercially,
We will continue to develop a portfolio of innovative projects in the Our Carbon Footprint section. which will contribute to our
areas such as energy storage, biofuels, distributed energy systems, For more details, please refer to the ongoing business growth.
and waste-to-energy projects to mitigate our risks in these markets. Supporting Customers with Low-
carbon Solutions section.
For more details, please refer to the Transitioning to a Low-carbon
Future section.