Hong Kong’s Towngas enlists HSBC, vendors in its efforts to cut supply-chain emissions

Hong Kong and China Gas Company (Towngas) has launched a new scheme with HSBC to improve efficiency and reduce supply chain emissions to help the city reach carbon neutrality by 2050.

Hong Kong’s sole piped-gas provider will extend advance payments to suppliers with a lower interest rate through its tie-up with the city’s largest lender, provided they can meet the company’s environmental, social, and governance (ESG) standards, according to the company.

“By linking sustainability performance to payment services, we hope to take on a larger role in further encouraging suppliers to improve their ESG management standards and jointly promote the sustainable transformation of the industry chain,” said Felix Lee, the head of ESG and corporate affairs at Towngas.

The scheme primarily targets the company’s suppliers for sales and installation of stove products, representing 20 per cent to 30 per cent of suppliers’ gas purchases.

The programme allows companies with better ESG performance to receive more favourable discounts on the interest rate, Towngas said. However, the company did not provide further details.

The scheme will also help Towngas to better track and reduce its scope 3 emissions, which are attributed to supply chain partners.

Towngas’ new scheme is in line with the Hong Kong stock exchange’s regulations on monetary disclosure of listed firms’ scope 3 emissions, which comes into force in 2026, Lee said. He expects between five and 10 suppliers to join the Towngas project this year.

The tightening disclosure requirements around scope 3 mean that small and medium-sized firms will need to make known their emissions if they want to do business with the largest firms listed on the city’s stock exchange.

“The new scheme will help the company’s cash flow and in turn production capability, factory management and credit to banks,” said Vincci Yu, assistant to the chairman at SCE Hardware, a Towngas vendor.

The scope 3 emissions of Towngas were around 27.56 million tonnes of carbon dioxide equivalent in 2023, according to the company’s latest sustainability report.

Towngas enlisted some 90 per cent of its suppliers last year to quantify and reduce greenhouse gas emissions in Hong Kong, the report added.

HSBC published its net zero transition plan in January and has provided US$294.4 billion in sustainable finance and investment to its customers since 2020, according to the bank’s latest annual report.

In late June, Towngas said it would increase gas tariffs by 4.8 per cent, adding that it estimated about 70 per cent of its residential customers would pay no more than HK$10 extra for their gas each month.

The company attributed the need to increase tariffs to rising operating expenses and, to a lesser extent, a labour shortage.

“Over the past two years, the operational expenses have been escalating, while a shortage of skilled technicians in the gas industry also resulted in heightened labour costs,” Towngas said.