The Hong Kong Monetary Authority (HKMA) has published the Hong Kong Taxonomy for Sustainable Finance, a framework aimed at raising awareness about green finance and promoting a common understanding of green activities. The taxonomy is designed to facilitate green finance flows, align investment decisions with climate goals, and reduce risks associated with non-aligned low-carbon assets. It also aims to unlock new investment opportunities in green technologies and sustainable projects while increasing transparency and accountability in the financial sector.
Covering 12 economic activities across four sectors—power generation, transportation, construction, and water and waste management—the taxonomy outlines core principles to ensure its credibility and scientific approach:
1. **Alignment with the Paris Agreement**: The taxonomy provides clearly defined metrics and thresholds aligned with the Paris Agreement and science-based targets.
2. **Proof against Greenwashing**: It adopts best practices from existing taxonomies to develop clear criteria for what can be considered “green,” ensuring verifiable claims.
3. **Interoperability with Other Taxonomies**: The taxonomy considers developments in other jurisdictions such as Mainland China, the EU, ASEAN, referencing key taxonomies like the Common Ground Taxonomy (CGT), the European Union’s Taxonomy for Sustainable Activities, China’s Green Bond Endorsed Projects Catalog, ASEAN Taxonomy, and the Climate Bonds Taxonomy (CBT).
4. **Science-Based Criteria and Thresholds**: It aligns with global efforts to transition to net-zero emissions by 2050.
5. **Foundations of Do No Significant Harm (DNSH) and Minimum Social Safeguards (MSS)**: It focuses on climate change mitigation while acknowledging interconnected sustainability issues.
This publication follows a discussion paper released in May 2023 that sought feedback on a prototype green classification framework. Feedback was positive, highlighting potential benefits such as clearer green product definitions, improved interoperability, and mitigated risks of greenwashing.
HKMA encourages the financial sector to use this taxonomy for assessing project greenness when labeling products or making disclosures. Moving forward, HKMA plans to expand this taxonomy’s coverage to include more sectors and activities related to transitions while continuing collaborations with stakeholders globally.
Visit Moody’s Analytics Climate and ESG Risk Microsite for insights into incorporating climate and ESG into risk assessments.
Related Links:
– [Press Release](#)
– [Hong Kong Taxonomy (PDF)](#)
– [Consultation Report (PDF)](#)
– [Supplemental Guidance (PDF)](#)
