40 4 Nexus between Mitigation and Adaptation capacity.8 Market professionals and academics serve on CGSF working groups, one of which is the Data Working Group (DWG) that works to enhance data resources for the financial industry. To address transition risk data gaps, DWG is collaborating with CDP9 to develop a comprehensive and userfriendly questionnaire template for financial institutions to collect SME/non-listed company transition risk data from their clients. Partnership with CDP allows for periodic updates of questionnaires for alignment with global disclosure standards (TCFD and ISSB reporting framework)10 and leverages CDP’s education support to train and guide relatively new reporting institutions. DWG had identified 10 categories of data gaps that need further work: 1. Historical catastrophe losses of typhoons, flooding and landslides by district, asset, property and industry, for damage estimation. 2. District level micro-climate conditions such as storm surge, wind speed, drainage and flooding, and precipitation. 3. Precise geographical information of (assets and) properties including latitude, longitude, elevation and distance from the coast. 4. Existing resilience mitigation measures built into infrastructure to withstand major extreme weather events, in place and planned, as well as the estimated effectiveness. 5. Insurance costs and claims by physical risk, district, and industry. 6. Death and accident figures iin extreme weather events, as well as second order effects in case workers are unable to get to their workplace. 7. Carbon footprint (including carbon emission source and level, carbon intensity, energy and water consumption) of SME and non-listed companies, especially on a gross basis (prior to any carbon offsetting) and Scope 3 emissions.11 8. Impacts / sensitivity of transition risk drivers such as carbon prices, technological advancement and market sentiment on corporate business decisions, and revenue and cost structure. 9. Projections on transition risks including demand and prices for carbon-intensive raw materials (such as steel, cement, glass, and plastics), and expected regulatory changes and impacts (such as penalty). 10. Transition capability and readiness of companies to lowcarbon economy, including pass-through of carbon prices to customers, carbon reduction / transition plans (such as R&D investment plans) and their estimated impacts, as well as emission reduction targets. The demand for such fulsome data presents considerable challenges. With Hong Kong’s ambition to be a leading international green finance centre, it is necessary to be proactive. However, it requires long-term effort and commitment to collaborate across disciplines to develop digital systems that provide usable data that are evidencebased and thus credible. It is encouraging that the process has started in earnest in Hong Kong. Designing and conducting cross-cutting dialogue The global climate transition is pushing governments and business to decarbonize, and at the same time to restore biodiversity to strengthen nature’s carbon absorption capacities, as well as to increase nature’s effectiveness in defending against extreme weather (such as in flood and landslide prevention). In addition, the rise of ESG reporting is stimulating the corporate sector to measure their performance much more widely. The climate transition cannot be achieved without evidence-based approaches, which requires the involvement of many areas of expertise. Moreover, mitigation and adaptation projects require the finance sector to base climate risk on credible data and calculation methods that are transparent and scientifically robust. Much more effort will have to go into meeting these complex challenges that require extensive collaboration from many disciplines, as well as from government, regulators and business.
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