HKMA Launches Hong Kong Taxonomy to Guide Sustainable Finance

HKMA Launches Hong Kong Taxonomy to Guide Sustainable Finance

by May 6, 2024

The Hong Kong Monetary Authority (HKMA) has released the Hong Kong Taxonomy for Sustainable Finance (Hong Kong Taxonomy). This publication aims to enhance informed decision-making in green and sustainable finance and to facilitate related financial flows.

The HKMA has developed this green classification framework after releasing a discussion paper in May 2023, seeking feedback from stakeholders on a prototype. The feedback was largely positive, with stakeholders supporting the clearer definitions of green products, enhanced interoperability, and reduced risks of greenwashing provided by the prototype.

Following the consultation, the HKMA refined the prototype into the now-published Hong Kong Taxonomy. This framework covers 12 economic activities across four sectors: power generation, transportation, construction, and water and waste management.

Guided by the Green and Sustainable Finance Cross-Agency Steering Group, it aligns with global standards like the Common Ground Taxonomy, China’s Green Bond Endorsed Projects Catalogue, and the European Union’s Taxonomy for Sustainable Activities.

The taxonomy aims to raise awareness about green finance, promote a common understanding of green activities, facilitate green finance flows, and lay a foundation for further applications. Financial sector participants are encouraged to use this taxonomy to assess the greenness of projects and assets during product labelling, development, and disclosures.

A consultation report and supplemental guidance have also been published to summarise stakeholder feedback and provide detailed background information, use cases, and responses to frequently asked questions.

The Hong Kong Taxonomy is described as a living document, with plans to expand its coverage to include more sectors and transition activities. The HKMA will continue collaborating with relevant stakeholders to promote its application and enhancement, contributing to sustainable development locally and globally.

The documents are available on the HKMA website. Additionally, the HKMA will soon launch the beta version of a cloud-based platform to help banks assess the potential impact of physical risks on residential and commercial buildings in Hong Kong under various climate scenarios.

Eddie YueHong Kong Taxonomy

Eddie Yue

“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,”

said Eddie Yue, Chief Executive of the HKMA.

Featured image credit: Edited from Unsplash