BRAC Bank, based in Bangladesh, has become the first bank in the country to disclose its Scope 3 greenhouse gas (GHG) emissions at the portfolio level, focusing primarily on business loans, which account for 81% of its total portfolio. This disclosure is a significant milestone in the banking industry's journey towards transparency and accountability in environmental impacts [da7a41e6]. BRAC Bank's Sustainability Report, endorsed by the Partnership for Carbon Accounting Financials (PCAF), demonstrates its commitment to international sustainability reporting standards. As a founding member of the Global Alliance for Banking on Values (GABV) and a signatory of PCAF, BRAC Bank has shown its dedication to sustainable banking and environmental stewardship within the financial sector. The bank's latest sustainability report adheres to the Global Reporting Initiative (GRI) Guidelines and highlights its unparalleled commitment to environmental transparency. BRAC Bank aims to achieve carbon neutrality and transition towards net zero emissions in the future [da7a41e6].
In another development, the Stock Exchange of Hong Kong Limited has announced new climate disclosure requirements under its environmental, social, and governance framework. Starting from January 1, 2025, the regulations will mandate the disclosure of Scope 1 and Scope 2 greenhouse gas emissions. The Hong Kong Stock Exchange's new climate requirements are based on the International Financial Reporting Standards (IFRS) Sustainability Standards, specifically IFRS S2. While Scope 3 disclosure will be optional for LargeCap Issuers in 2025, it will become mandatory on January 1, 2026. This move aligns with the European Sustainability Reporting Standards (ESRS), which require Scope 3 disclosure for all reporting entities. In contrast, the U.S. Securities and Exchange Commission's (SEC) Climate-Related Disclosure Rule allows for optional Scope 3 disclosure based on a materiality assessment [0b767b9d].
ESG start-ups are developing tools to allow firms to calculate the carbon emissions from small and medium-sized enterprises (SME) and suppliers along their value chains to meet tightening climate disclosure requirements. In Hong Kong, it will be mandatory for the largest listed firms to report on their Scope 3 emissions for the financial year beginning January 1, 2026. Benjamin Soh, co-founder and managing director of Singapore-based ESG fintech firm Stacs, says that SMEs will need to start disclosing their emissions if they want to do business with the largest firms. Stacs' ESGpedia platform provides a free service for SMEs to calculate their direct emissions from owned or controlled sources (Scope 1) and indirect emissions from the generation of bought energy (Scope 2), as well as other common ESG data points. Larger corporations that need to compile the data from SMEs and other suppliers for Scope 3 emissions reporting using ESGpedia will be charged a fee. Stacs has also partnered with banks to provide green financial products. ESG consulting firm Downundered is also aiming to help firms make their supply chains more sustainable by measuring greenhouse-gas emissions and helping firms upgrade their supply chain to reduce Scope 3 emissions [964ccab1].
The Capital Markets Malaysia (CMM) has released additional guidance on environmental, social, and governance (ESG) disclosure for small and medium-sized enterprises (SMEs) in five sectors. The guidance aims to help SMEs in the automotive, construction, healthcare, manufacturing, and retail sectors improve their ESG reporting. It includes specific recommendations on ESG topics such as carbon emissions, waste management, employee welfare, and supply chain sustainability. The release of this guidance is part of CMM's efforts to promote sustainable and responsible business practices in Malaysia. The guidance is expected to be implemented by SMEs starting from 2024 [d4e0de6a].
The disclosure of greenhouse gas emissions by banks and stock exchanges is a crucial step towards addressing climate change. It allows stakeholders to assess the environmental impact of these institutions and hold them accountable for their contributions to global warming. By disclosing their emissions, banks and stock exchanges can also identify areas for improvement and develop strategies to reduce their carbon footprint. This transparency is essential in the transition to a more sustainable and low-carbon economy.