We are committed to a comprehensive and proactive approach to managing climate adaptation and mitigation, focusing on reducing greenhouse gas emissions, enhancing resilience to climate impacts, and promoting sustainability across our operations. Our approach to building climate resilience has two aspects.
Climate Adaptation: We need to adapt to the climate change that is already underway by identifying and managing the risks it presents to our assets and operations.
Climate Mitigation: We need to make best efforts to reduce carbon emissions in our business, in order to alleviate our possible adverse impacts to the climate.
We are the first real estate company in Hong Kong and mainland China – and among the first globally – to have our near- and long-term netzero targets endorsed under SBTi’s Corporate Net-Zero Standard. In 2024, Hang Lung completed our first comprehensive effort to examine scenarios, challenges and opportunities on our path to achieving netzero greenhouse gas emissions across our value chain. We undertook this exercise to gain a better understanding of our long-term challenges and opportunities in decarbonization, mindful of our commitment to achieving net zero by 2050. The paper is available here.
2030 Goal
Reduce carbon footprint in line with climate science.
2030 Targets
- Demonstrate best efforts to achieve 70% reduction of scopes 1 and 2 greenhouse gas emissions intensity (per m2), compared to 2018 baseline
- Build a nearly net zero carbon building
25 x 25 Sustainability Targets
- 40% cumulative reduction in GHG intensity (kg CO2e/m2) relative to 2018
- 18% cumulative reduction in electricity intensity (kWh/m2) relative to 2018
- 25% of our mainland China portfolio electricity demand met by renewable energy
- Wherever feasible exceed local regulations for the provision of parking spaces installed with EV charging facilities across our portfolio
- Demonstrate best efforts to achieve at least 10% reduction in embodied carbon intensity (kg CO2e/m2) for new development project that begin in 2022 or later, compared to typical practice in an equivalent building
- 15% reduction in GHG intensity (kg CO2e/m2) from tenants’ electricity consumption for our properties in mainland China, relative to 2018
- Complete technical analysis for climate adaptation measures for all properties
External Carbon Pricing Scenario Analysis
Carbon pricing is expected to have a growing impact on the real estate sector in the coming years. Since 2021, we have closely tracked external carbon pricing mechanisms that could affect our operations and financial performance. In 2022 and 2023, we conducted a carbon pricing scenario analysis, taking into account China-specific policies and plans, including the country’s Emissions Trading Scheme (ETS), to gain a deeper understanding of the potential implications for our business. Under a Business-as-Usual (BAU) scenario in which we failed to pursue decarbonization opportunities for our business, carbon costs were projected to increase significantly, adding between HK$63 million and HK$1 billion in carbon costs in 2030, and between HK$969 million to HK$14 billion in 2050. In 2050, achieving our Science-Based Targets (SBTs) could reduce our potential carbon costs by 95%, demonstrating the financial value of aligning with global climate goals. We continue to take reference from the findings of this analysis. Based on our current transition plan, the Group expects to invest approximately HK$57 million to HK$70 million annually in energy efficiency and other decarbonization measures through 2030, with actual annual expenditure varying depending on equipment replacement and renovation costs and schedules.
Internal Carbon Pricing
To drive emission reduction, we have piloted – and continue to develop – the use of internal carbon pricing (ICP) to inform our decision making, drive energy efficiency and low carbon investments, and identify and seize low carbon opportunities within the Group. Using shadow pricing, we have applied a hypothetical cost to our current and future potential carbon emissions to understand their potential financial sensitivities. We began piloting ICP in Scope 1 and 2 decarbonization projects such as renewable energy procurement. These pilot projects allowed us to validate the approach and refine its application before scaling ICP across more business decisions, ensuring that carbon-related risks and opportunities are effectively integrated into our decision-making processes.
Our ICP model combines China-specific carbon pricing considerations with climate scenario projections from the Network for Greening the Financial System (NGFS), allowing the shadow price to increase over time to account for potential changes in carbon pricing policies and climate ambition. Following an update of the model to incorporate the latest NGFS Phase V scenario data, under the Net Zero 2050 Scenario our shadow carbon price reaches approximately US$147 per metric tonne of CO2e in 2030, expressed in constant 2010 US dollars (approximately HK$1,141 per metric tonne). Use of an escalating carbon price over time enables us to compare our current options for long-lived capital investments such as chillers and heat pumps, ensuring a thorough lifecycle analysis to support investment decisions. Key ICP analysis results and conclusions are captured in our Carbon and Energy Plan for Operations (CEPO), updated every six months.
Net Zero Transition
To support our 2050 net zero emissions targets for our value chain emissions, Hang Lung has developed a transition plan for the period from 2026-2030. Known internally as our Carbon and Energy Plan for Operations (CEPO), the transition plan is aligned with the Paris Agreement goal of pursuing efforts to limit global average temperature increase to 1.5℃, and it supports the delivery of our SBTi-validated targets. The plan has been approved by our CEO and will be updated at least semi-annually. Under the plan, we target at least HK$ 225 million in capital expenditures to the end of 2030. The plan identifies priority initiatives that will improve efficiency, reduce carbon, and reduce costs. Key levers we are pursuing under the plan and to achieve our carbon and energy efficiency targets include:
- Transition heating in selected properties through electrification and heat pump technologies;
- Piloting AI to improve operational performance and energy efficiency;
- HVAC upgrades and equipment replacement;
- Increasing the output of onsite renewable energy; and
- Lighting upgrades.
We will also continue to procure renewable energy through electricity markets to reduce our Scope 2 and 3 emissions. For construction, we will continue to procure lower carbon materials, including steel, aluminum, and concrete, and we are working to advance circularity practices in new developments and renovations.
In the development and updates to our transition plan, we undertake extensive stakeholder engagement including assessment of the social implications. Stakeholders consulted include government officials, tenants, suppliers, university experts, design institutes, real estate associations, investors and financial institutions. Our plan is aligned with and supportive of China’s dual carbon goals as well as the country’s economic and social development goals.
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