Achieving carbon neutrality in Hong Kong: a comparative policy analysis and introduction to simulation strategies

Climate change presents significant financial risks to businesses, while profoundly impacting people’s daily lives and causing drastic changes in nature. Hong Kong has set an ambitious carbon neutrality target of 2050 to mitigate climate risks. Climate Value-at-Risk (CVaR) is a quantitative metric to evaluate these risks, supporting effective risk management and decision making. This paper offers a comprehensive overview of CVaR concepts and scrutinises existing policies in Hong Kong, compared to other countries. It presents a brief comparison of common carbon emission data sources, along with an examination of commercially employed benchmarking and CVaR simulation tools. Data quality and availability, however, remain substantial challenges in estimating CVaR accurately. Fuzzy logic application to quantify CVaR is suggested, and it represents an effective approach to professionally manage the decarbonisation journey. Leveraging advancements in technology, Hong Kong policymakers can draw valuable insights from leading countries' climate policies and utilise the fuzzy logic model to make necessary changes to achieve more ambitious climate goals, accelerating the city towards carbon neutrality.