Overview and Comparison of National Green Finance Taxonomies
Sustainable Finance Think Tank & Consultancy
climateandcompany.org hello@climcom.org Berlin - Amsterdam - Salzburg
What are the Benefits of Green Finance Taxonomies? To strengthen the financial system that is facing the cascading impacts of climate change, it is vital to empower all market actors and promote the disclosure of private and public capital flows to green sectors. Green finance taxonomies are classification systems that identify which economic activities are considered environmentallyfriendly and define clear performance thresholds for each activity to meet key sustainability objectives (ICMA, 2021). These objectives can range from biodiversity protection and pollution prevention to climate change adaptation as well as mitigation. Taxonomies thus contribute to directing capital flows towards sustainable investments and help increase the financial disclosure of public and private market actors, hence reducing information asymmetries and increasing financial transparency. In essence, green finance taxonomies help investors, companies, issuers and project promoters navigate the transition to a lowcarbon, resilient and resource-efficient economy (EC, 2020).
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Methodology: Analysing Taxonomy Building Blocks The comparison of international approaches to green finance taxonomies will be based on analysing three of the most important and decisive taxonomy building blocks, which are introduced in the following:
Which environmental objectives does the taxonomy address/plan to address?
Are technical screening criteria (TSC) for economic activities that contribute substantially to one of the environmental objectives already defined? If yes, are quantitative metrics and dynamic thresholds provided or only descriptive metrics used? Are ‘Do Not Significant Harm’ (DNSH) criteria for the other environmental objectives defined? The principle of DNSH means that an economic activity, which contributes substantially to one of the environmental objectives, shall also not significantly harm any of other environmental objectives. Climate & Company | 3
Overview of National Green Finance Taxonomies Canada
European Union
Russia
Mongolia
Mexico
United Kingdom
Kazakhstan
China
Thailand
Japan
Dominican Republic
South Korea Vietnam
Taxonomy in development
Philippines
Implemented regulation
Malaysia Colombia
Singapore
Peru
India
Brazil
Bangladesh
Chile Source: Author’s own elaboration.
South Africa
Sri Lanka
Indonesia New Zealand
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International Experiences in Green Finance Taxonomies (1/2)
ASEAN* Environmental Objectives:
§ § § §
CCA CCM Circular Economy Biodiversity Protection
Bangladesh* § § §
Water Conservation Circular Economy Pollution Prevention
Brazil* In development.
Canada* In development.
Chile* In development.
China § § § §
CCA Circular Economy Pollution Prevention Biodiversity Protection
Colombia § § § § § §
TSC defined for:
In development.
In development.
In development.
In development.
In development.
Selected projects (only descriptive metrics used).
CCA CCM Water & Soil Mgmt. Circular Economy Pollution Prevention Biodiversity Protection
7 sectors contributing to CCM.
Dominican Republic* In development.
European Union CCA CCM Water Conservation Circular Economy Pollution Prevention Biodiversity Protection
§ § § § § §
In development.
3 sectors contributing to other environ. objectives.
13 sectors contributing to CCA and CCM.
India* In development.
Indonesia*
Kazakhstan*
In development.
In development.
Malaysia § § § §
CCA CCM Circular Economy Biodiversity Protection
In development.
In development.
In development.
Some economic activities contributing to CCA and CCM (only descriptive metrics used).
11 sectors contributing to other environ. objectives.
DNSH Criteria defined for:
In development.
N/A.
In development.
In development.
In development.
N/A.
7 sectors contributing to CCM.
In development.
Some of the 13 sectors.
In development.
In development.
In development.
N/A.
Classification Code:
ISIC
No reference.
No reference.
No reference.
No reference.
Classification of Strategic Emerging Industry
ISIC
No reference.
NACE
No reference.
No reference.
No reference.
No reference.
Link:
ASEAN Taxonomy for Sustainable Finance
Bangladesh Bank: Sustainable Finance Policy for Banks and Financial Institutions
Taxonomia Verde da FEBRABAN
Defining Transition Finance in Canada
Taxonomy Roadmap for Chile
People’s Bank of China: Green Bond Endorsed Projects Catalogue (2021 Edition)
Taxonomía Verde de Colombia
MIMARENA, SIMV e IFC anuncian Proyecto de Taxonomía Verde en República Dominicana
EU Taxonomy for Sustainable Activities
Developing a Green Taxonomy for India: A Rulebook
Indonesia Green Taxonomy Edition 1.0
The AIFC developed and submitted a draft Resolution of the Government of Kazakhstan on Green Taxonomy
Bank Negara Malaysia: Climate Change and Principle-based Taxonomy
* N/A
(National) green finance taxonomies still in development, therefore potential information limitations.
CCA
Climate change adaptation
Not applicable.
CCM
Climate change mitigation
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International Experiences in Green Finance Taxonomies (2/2)
Mexico* Environmental Objectives:
In development.
Mongolia § § § §
CCA CCM Circular Economy Pollution Prevention
New Zealand* In development.
Peru* In development.
Philippines* In development.
Russia* § § §
Pollution Prevention Environ. Protection GHG Emissions Reduction
Singapore* § § § § §
CCA CCM Circular Economy Pollution Prevention Biodiversity Protection
South Africa* § § § § § §
CCA CCM Water Conservation Circular Economy Pollution Prevention Biodiversity Protection
South Korea* § § § § § §
CCA Water Conservation Circular Economy Pollution Prevention Biodiversity Protection GHG Emissions Reduction
Sri Lanka* § § § §
United Kingdom*
Thailand*
CCA CCM Pollution Prevention Ecological Conservation
In development.
In development.
TSC defined for:
In development.
Some economic activities from 8 sectors (only descriptive metrics used).
In development.
In development.
In development.
Selected projects from 8 sectors.
Some economic activities from 3 sectors.
Some economic activities from 8 sectors contributing to CCA and CCM.
69 economic activities.
Some economic activities from 8 sectors contributing to all environmental objectives.
In development.
In development.
DNSH Criteria defined for:
In development.
N/A.
In development.
In development.
In development.
N/A.
In development.
Some economic activities from 8 sectors contributing to CCA and CCM.
69 economic activities.
N/A.
In development.
In development.
Classification Code:
No reference.
No reference.
No reference.
No reference.
No reference.
No reference.
ISIC
SIC
No reference.
No reference.
No reference.
No reference.
Link:
Recomendaciones para el Desarrollo de una Taxonomía de Finanzas Sostenibles en México
Mongolian Green Taxonomy
Taxonomies Overview And Perspectives For Aotearoa New Zealand
MINAM: Hoja de Ruta hacia las Finanzas Verdes
The Philippine Sustainable Finance Roadmap
Russian National Green Finance System
ABS: Green Finance Industry Taskforce (GFIT) Taxonomy Public Consultation
South African Taxonomy Working Group
Introduction of KTaxonomy Guideline
Sri Lanka Green Finance Taxonomy
Sustainable Finance Initiatives for Thailand
UK Greening Finance: A Roadmap to Sustainable Investing
* N/A
(National) green finance taxonomies still in development, therefore potential information limitations.
CCA
Climate change adaptation
Not applicable.
CCM
Climate change mitigation
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Further Reading § CBI (2022). Global Green Taxonomy Development, Alignment and Implementation. Available at https://www.climatebonds.net/resources/reports/global-green-taxonomy-development-alignment-and-implementation. § EC (2020). Taxonomy: Final Report of the Technical Expert Group on Sustainable Finance. Available at https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/200309-sustainable-finance-teg-finalreport-taxonomy_en.pdf. § FoSDA (2021). Taxomania! An International Overview. Available at https://futureofsustainabledata.com/taxomania-an-international-overview/. § ICMA (2021). Overview and Recommendations for Sustainable Finance Taxonomies. Available at https://www.icmagroup.org/News/news-inbrief/icma-publishes-overview-of-taxonomies-for-sustainable-finance-and-recommends-success-criteria/. § IESE (2021). Taxonomía Medioambiental y Productos Financieros Verdes: Finanzas para una Nueva Europa. Available at https://media.iese.edu/research/pdfs/ST-0617. § IPSF (2021). Common Ground Taxonomy – Climate Change Mitigation. Available at https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/211104-ipsf-common-ground-taxonomyinstruction-report-2021_en.pdf. § Natixis (2021). The New Geography of Taxonomies. Available at https://gsh.cib.natixis.com/our-center-of-expertise/articles/the-new-geography-oftaxonomies. § OECD (2020). Developing Sustainable Finance Definitions and Taxonomies. Available at https://www.oecd.org/env/developing-sustainable-financedefinitions-and-taxonomies-134a2dbe-en.htm. § World Bank Group (2020). Developing a National Green Taxonomy: A World Bank Guide. Available at https://documents.worldbank.org/en/publication/documents-reports/documentdetail/953011593410423487/developing-a-national-greentaxonomy-a-world-bank-guide. Climate & Company | 7
Impressum
Publication Details
Angaben gemäß § 5 TMG: Climate & Company – The Berlin Institute for Climate Training and Research gGmbH Ahornallee 2 12623 Berlin
Author: Daniel Scharwies Junior Analyst at Climate & Company
Vertreten durch: Ingmar Juergens David Rusnok
Version: 1.0, May 2022
Email: hello@climcom.org Verantwortlich für den Inhalt nach § 55 Abs. 2 RStV: Ingmar Juergens & David Rusnok Ahornallee 2 12623 Berlin www.climateandcompany.org