Hong Kong Launches Taxonomy to Classify Green Activities and Investments

The Hong Kong Monetary Authority (HKMA) has announced the publication of the Hong Kong Taxonomy for Sustainable Finance, a framework designed to define and classify environmentally sustainable economic activities. The taxonomy aims to provide a standardized framework for labeling financial products based on their environmental sustainability characteristics, enabling investors to identify and invest in activities that have a positive impact on the environment. It also helps align investments with climate goals and reduce the risk of investing in assets that are not in line with a low-carbon future. The taxonomy initially covers 12 economic activities across sectors such as power generation, transportation, construction, and water and waste management. The HKMA plans to expand its coverage to include more sectors and activities in the future, including transition activities. This move by the HKMA is part of a global trend towards establishing classification systems for sustainable economic activities. Similar taxonomy systems have been developed or are in progress in jurisdictions such as the EU, UK, and Australia. The HKMA’s taxonomy incorporates core principles such as alignment with the Paris Agreement, proof against greenwashing, interoperability with other taxonomies, science-based criteria, and recognition of concepts like Do No Significant Harm (DNSH) and Minimum Social Safeguards (MSS). The release of the taxonomy follows the positive response received from stakeholders during the consultation process, with many welcoming the classification system for its potential to provide clarity, enhance interoperability, and reduce the risk of greenwashing. HKMA Chief Executive Mr. Eddie Yue views the release of the taxonomy as a significant milestone for Hong Kong’s sustainable finance landscape, enabling informed decision-making, driving cross-border investments, and contributing to global efforts in combating climate change. Resources: https://www.esgtoday.com/hong-kong-launches-taxonomy-to-classify-green-activities-and-investments/