It is the mission of Towngas Smart Energy to provide clean and reliable energy. We vigorously develop business related to renewable energy based on our existing resources to promote the Group’s low-carbon transformation towards smart energy, so as to enhance the Group’s climate resilience in all respects.

Since commencing systematic assessments in 2021, Towngas Smart Energy has continuously conducted physical climate risk identification and analysis, with a particular focus on the adoption of climate models to forecast future risk trends. We continued to conduct on-site physical risk assessments for assets on the Chinese mainland to gain a deeper understanding of their vulnerabilities and resilience to major disasters, ensuring that effective protective systems are in place to withstand various climate stresses. To strengthen the management of climate-related physical risks, we have developed a climate change risk assessment checklist for gas facilities. For facilities with higher risk levels, we have conducted further analysis and assessment. We also continued to hold ESG and climate change training for management to equip them with the knowledge and methodologies required to tackle climate hazards in the future.

Transition risks associated with climate change impacts can be broadly classified into policy and legal changes, technological developments, market changes, and reputational risks. In 2020, we identified four scenarios based on the International Energy Agency’s (IEA) World Energy Outlook 2019, which considered the pace of technological advancement and the stringency of policy implementation. To ensure our analysis aligns with the latest trends, we updated these scenarios with reference to the IEA World Energy Outlook 2021 and the Network for Greening the Financial System (NGFS) scenarios, also taking into consideration the Net Zero Emissions by 2050 Scenario,

In alignment with national policy imperatives, the Group actively promotes the adoption of renewable energy through three strategic pillars: integrated energy solutions, decarbonisation, and digital intelligence transformation. Focusing on zero-carbon smart industrial parks, we address customers' energy-saving and carbon-reduction requests. By the end of 2025, we served more than 2,000 industrial customers across 25 provinces, autonomous regions, and municipalities nationwide. This has resulted in a cumulative distributed photovoltaic grid-connected installed capacity of 2.8 GW, with photovoltaic power generation increasing by 36% to 2.48 billion kWh. Furthermore, we have secured contractual commitments for commercial and industrial energy storage exceeding 1,041 MWh and recorded electricity sales transactions of 8.4 billion kWh. We have also established 128 zero-carbon smart industrial parks, contributing to the national “dual carbon” goals whilst delivering tangible economic benefits.

The Group has established comprehensive policies dedicated to optimising resource utilisation, minimising pollutant emissions and waste generation, and protecting the natural environment and biodiversity, while encouraging business partners to comply with relevant guidelines. Through sustainable procurement practices, we prioritise environmentally beneficial products and services to mitigate supply chain risks. To fulfil our commitment to sustainable development, the Group actively engages employees and other stakeholders in enhancing resource utilisation efficiency and ecological conservation.

In active response to the TNFD framework, the Group, together with its parent company, HKCG, published the Climate-Related and Nature-Related Directive Guide in 2022. We referenced the TNFD’s recommended LEAP (Locate, Evaluate, Assess, and Prepare) approach of assessing nature-related risks and analysed 117 projects. We first conducted a preliminary screening of our operational sites, and adopted the Integrated Biodiversity Assessment Tool (IBAT) to assess whether each project site is located within an area of high biodiversity value based on three indicators: (1) protected areas, (2) key biodiversity areas, and (3) the number of endangered species.

The assessment results indicate that 69 of the 117 locations are situated within areas with higher biodiversity value. Among them, 11 sites are prioritised for attention due to their proximity within 10 km of key biodiversity areas, with 4 of these 11 sites adjacent to protected areas. These identified results establish a priority sequence, providing a basis for subsequent risk management and action deployment.

Towngas Smart Energy launched its “Saving Energy, Going All ‘Green’” low-carbon initiative, encouraging employees to adopt green living through daily habits. The campaign revolved around four key themes: “Towngas Greening Day”, “Earth Hour”, “Low-Carbon Living Experts”, and “Creative Uses of Coffee Grounds”, receiving enthusiastic participation across our project companies. During the initiative, employees from over 70 project companies teamed up with local communities to advance green actions, planting a cumulative total of approximately 4,000 trees and potted plants. The campaign also promoted the concept of waste upcycling, further elevating environmental awareness among our workforce and the public.

The Company is committed to the pursuit of best practices that create comprehensive value rooted in stakeholder and public interest. Through shouldering its corporate social responsibility ("CSR") across diverse aspects, it promotes sustainable socioeconomic development.

Promoting Employee Development

This year, under the theme “Unlock Versatility for Success”, we continued to provide diversified training to employees and introduced new courses related to business acumen and information technology, covering financial concepts and global market trends.

Customer Excellence

During the year, the Group conducted “Customer Service Quality Special Self-Assessment” for a total of 90 Gas Business project companies. Through systematic evaluation and continuous improvement, the Group strengthened service quality to further enhance customer experience. Customer satisfaction of Gas Business reached 97.4% during the year.

Giving Back to Society

The Group is dedicated to promoting healthy community development and caring for disadvantaged groups through diverse community care initiatives. This year, we continued to engage with the local community by providing targeted support to the elderly, low-income families, persons with disabilities, and other individuals in need, fostering community harmony and prosperity while spreading warmth and positive energy.

The “Gentle Breeze Movement” continued to improve the learning environment for teachers and students this year. Since its launch in 2013, the initiative has spanned 13 provinces, autonomous regions and municipalities, cumulatively donating educational materials worth over HK$4.6 million to 40 schools, benefiting approximately 20,000 teachers and students. We also established the Towngas Smart Energy Charity Library, enabling children to broaden their horizons through reading.

Supply Chain Management

In the supplier selection process, we have established ESG-related criteria to assess suppliers’ ESG performance. This initiative further demonstrates the Group's commitment to upholding high ethical standards and sustainable operational principles in supply chain management, while striving to enhance the resilience of the overall supply chain. For existing suppliers, the Group continuously identifies critical suppliers and monitors their ESG performance. A regular assessment mechanism covering self-assessments, questionnaire submissions and on-site inspections has been established to systematically understand suppliers' ESG performance.

Towngas Smart Energy has always considered safety as its priority. Throughout the years, it has upheld the principle of "safety first" and established a comprehensive risk management structure and production safety responsibility system to enhance safety awareness at every level. The Group pledges to take responsibility for safety and health and remains committed to its endeavour to attain even higher standards.

Ensuring Safety Through a Multi-Pronged Approach

The Group adheres to the principles of design and engineering excellence to ensure that facilities meet the highest safety standards. Through innovative technologies, we employ advanced systems for round-the-clock monitoring of equipment condition, to maintain high standards of asset integrity and crisis management, ensuring a secure and reliable energy supply.

The Group continues to conduct safety inspections of gas pipelines and facilities, and invests substantial resources in replacing ageing pipeline network to prevent gas leakage risks, ensuring a safe and reliable gas supply system.

Prioritising Employee Occupational Safety and Health

We continuously implements occupational health and safety training and has established multiple reporting channels and promotional programmes, including a platform for reporting HSE recommendations as well as near-miss cases. This encourages our employees to proactively report issues so that corrective and preventive actions can be taken. We also operate a reward system to recognise employees who demonstrate safety accountability and outstanding performance.

The Group organised “Job Hazard Analysis Training Workshop” to enhance employees’ accident prevention capabilities. The workshop adopted a “theoretical instruction + case analysis” approach, introducing job safety analysis methodologies and comprehensively demonstrating the full lifecycle management process from risk identification and classification to the formulation of control measures.

The Towngas Smart Energy Board of Directors (the Board), the highest governance body, has the overall responsibility of overseeing material Environmental, Social and Governance (ESG) issues, and evaluating, determining and integrating relevant risks and opportunities into our key governance processes. The Group has established a multi-level ESG governance framework led by the Board, forming a tiered management structure through the ESG Committee and ESG Steering Committee.

The Board-level ESG Committee oversees the Group’s ESG development, strategies, policies and practices. The ESG Committee is chaired by the Independent Non-Executive Director, who reports ESG matters to the Board on a regular basis.

Under the leadership of the ESG Committee, the ESG Steering Committee is composed of representatives from business units and relevant functional group department heads. The ESG Steering Committee is responsible for formulating relevant performance indicators, managing and enhancing ESG performance, and advancing the Group-level ESG management approach. The Group ESG Department is led by the Head of ESG, who reports directly to the Chief Financial Officer, and is responsible for overall coordination and support to ensure the effective implementation of relevant strategies and measures. 

Risk Identification and Robust Response

The Group has established a risk management system, which is able to effectively identify, assess, mitigate, report and monitor key risks (including ESG risks) of the Group, to ensure the Group’s business growth and long-term value for the key stakeholders. As part of our ongoing risk management efforts, the Group conducts a risk assessment semi-annually to ensure that major risks are within the Group’s risk appetite after implementing risk management measures.

Stringent Risk Management

The Group adheres to compliant business practices, upholds business ethical standards, and maintains a culture of integrity and transparency to ensure that these principles are firmly embedded across its corporate operations. To foster a transparent and ethical business environment, we have implemented a series of training and monitoring measures, and continuously refined our supervisory framework. We adhere to high ethical standards, actively promote a culture of integrity, encourage whistleblowing of misconduct, and prioritise data protection and information security, in order to strengthen stakeholder trust and collaborative relationships.

Towngas Smart Energy Company Limited ("Towngas Smart Energy") is a public utility subsidiary operated by The Hong Kong and China Gas Company Limited on the Chinese mainland with diverse businesses that contribute towards the Company's growth. In addition to the traditional Gas Business, we have actively expanded the Renewable Energy Business, including distributed photovoltaic and energy storage systems, to drive the Group’s long-term development in low-carbon transition and sustainable development.

Actively Promoting the Adoption of Renewable Energy

At the operational level, we are developing grid-connected bio-natural gas projects and exploring hydrogen blending applications in natural gas pipelines to reduce carbon emissions from the pipeline network. At the customer level, we continue to promote “Gas+” services to enhance energy efficiency, while investing in renewable energy projects within zero-carbon
smart industrial parks, comprehensively advancing low-carbon sustainable development.

Exploring Hydrogen Blending in Natural Gas
Regarding the applications of blending hydrogen into natural gas pipelines, the Group is making steady progress, centred on the “Bringing Hydrogen into Households” demonstration project by Weifang Hong Kong and China Gas Company Limited. During the year, the project completed the commissioning of production equipment with a hydrogen production capacity of 3.6 tonnes/day, alongside the construction of 5.2 km of transmission pipelines. Trial operation is expected to commence in 2026, targeting to serve 100,000 residential customers. The Group is also developing multiple industrial applications for blending hydrogen into natural gas pipelines in Changchun city and other locations in the country.

Continuously Advancing "Gas+" Services

“Gas+” is based on city gas supply, with a core focus on optimising energy allocation for customers and enhancing energy efficiency. By providing customers with low-carbon integrated energy solutions and smart operation services, we comprehensively empower various scenarios to achieve energy conservation and carbon reduction.

The Group provides energy infrastructure facilities such as distributed photovoltaics and energy storage, as well as smart value-added services including energy efficiency management, carbon management and virtual power plants. We develop integrated energy solutions and leverage the smart energy ecosystem platform to create zero-carbon smart industrial parks and low-carbon factories.