Stockholm (NordSIP) – Although the EU Taxonomy is the most complete categorisation of economic activities by their degree of sustainability, it is not the only such scheme. Although partners like the USA, Japan and the UK continue to dither on the matter, among the EU’s trading partners, China is perhaps the most prominent counterpart to have developed such a set of definitions, China’s Green Bond Endorsed Projects Catalogue.
It appears that Hong Kong, often considered Asia’s financial hub, is the latest addition to this roster. At the start of May, the Hong Kong Monetary Authority (HKMA) published its own Taxonomy for Sustainable Finance (Hong Kong Taxonomy), a green classification framework for adoption in the local market, not unlike the EU’s seminal contribution. Taxonomies on sustainable economic activities seek to provide catalogue and define green products, enhance interoperability and help reduce greenwashing risks for investors.
“The release of the Hong Kong Taxonomy for Sustainable Finance marks a key milestone for Hong Kong’s sustainable finance landscape. By providing a common language and framework for sustainable finance, we are equipping market participants with an important tool to make informed decisions, drive impactful cross-border investments, and contribute to global efforts in combating climate change,” Eddie Yue, Chief Executive of the HKMA, said.
Currently, the Hong Kong Taxonomy encompasses 12 economic activities under four sectors namely power generation, transportation, construction, and water and waste management. The Hong Kong Taxonomy is relatively lighter in comparison to the more comprehensive EU Taxonomy, which covers 147 economic activities over 16 sectors (Accomodation; Arts & Entertainment; Construction and Real Estate; Disaster risk management; Education; Energy, Financial and insurance activities; Forestry; Human health and social work activities; IT; Manufacturing; Professional, scientific and technical activities; Services; Transport; and Water supply, sewerage, waste management and remediation)
According to the HKMA, work on the Hong Kong Taxonomy was led by the Green and Sustainable Finance Cross-Agency Steering Group and was guided by the principles of interoperability, comparability and inclusiveness. The Taxonomy “also facilitates easy navigation among the Common Ground Taxonomy, China’s Green Bond Endorsed Projects Catalogue and the EU Taxonomy for Sustainable Activities. It will serve as a pivotal tool to raise awareness about green finance, promote common understanding on green activities, facilitate green finance flows, and provide a foundation for further applications. We encourage the financial sector to use the Hong Kong Taxonomy to assess the greenness of projects and assets when labelling and developing products, as well as making disclosures,” the HKMA said.
A consultation report was also published to summarise the feedback received, together with responses and recommendations on future work. In addition, to facilitate users to understand and apply the Hong Kong Taxonomy, a document with supplemental guidance was prepared to provide background information, illustrative use cases, and responses to frequently asked questions.
“The Hong Kong Taxonomy is a living document. For the next step, the HKMA will seek to expand the coverage of the taxonomy to include more sectors and activities, including transition activities. The HKMA will also continue the collaboration with relevant stakeholders to promote its application and enhancement, contributing to the sustainable development in Hong Kong and the world,” the HKMA concluded
