Joint study reveals most firms miss Scope 3 emission baseline and mature transition plans

More than half do not report Scope 3 emissions.

A new study by KPMG China and DBS Bank (Hong Kong) has revealed that just 10% of companies have mature transition plans aligned with the Ambition, Action, and Accountability (3As) principles recommended by the Transition Plan Taskforce.

The joint research, which examined around 50 listed companies in Hong Kong, found that more than half have yet to begin reporting Scope 3 emissions—indirect greenhouse gas emissions that typically account for the largest share of a company’s carbon footprint.

“For the majority of them, over 70% of the total emission actually belongs to Scope 3,” said Angus Choi, Partner, ESG Advisory, KPMG China.

“For all these large capitalistic companies in Hong Kong, they will be mandated to disclose their Scope 3 emissions in 2026,” he said. “If a company wants to commit to carbon neutrality or net zero, they really need to know their baseline first before they can set a meaningful target,” Choi emphasised.

Serena Mak, Executive Director of Sustainable Finance at DBS Bank (Hong Kong), added that indirect emissions are just as relevant for financial institutions. “It is important to ensure that it embeds into the company's business and it creates long-term value and resilience,” she said. “Capturing optimisation opportunities effectively will lead to things like route optimisation, logistics optimisation—which in fact is cost savings.”

To accelerate transition efforts, Choi said companies should take three key steps: “Establish a comprehensive carbon emission baseline… Set a carbon reduction target based on science… And embed all decarbonisation actions into the company’s business plan.”

Mak agreed but cautioned that strategies must evolve with technology and policy. She noted that energy efficiency, renewable energy, and environmental protection were the top three green investments disclosed by companies in the study.

On what it takes to align with the 3As framework, Choi noted that banks are already using it as a foundation for transition assessments and financial product offerings. “Banks may provide advisory services to them… Banks can actually offer different types of green, sustainable and even transition financial products.”

Mak added, “Transition plans are not just a plan to show or demonstrate a climate commitment… It also helps to drive investment decisions. So the science and the capex should be aligned.”