The HKMA has unveiled the Hong Kong Taxonomy for Sustainable Finance, which is aimed at defining environmentally sustainable economic activities.
This initiative seeks to provide clarity and guidance for investors, facilitating the flow of green finance while aligning investments with climate goals, claims ESG Today.
The taxonomy offers a standardised framework for classifying financial products based on their environmental sustainability characteristics. By doing so, it enables investors to identify opportunities that contribute positively to the environment and avoid those with adverse impacts. Moreover, it reduces the risk associated with investing in assets incompatible with a low-carbon future.
Covering 12 economic activities across four sectors including power generation, transportation, construction, and water and waste management, the taxonomy represents an initial step towards comprehensive classification. The HKMA plans to expand its coverage to include additional sectors and transition activities in the future. This move follows similar initiatives in other jurisdictions, such as the European Union, the United Kingdom, and Australia, which have already established or are developing taxonomy systems.
Feedback from stakeholders regarding the prototype green classification framework and discussion paper released last year by the HKMA has been positive. Stakeholders welcomed the potential for clearer definitions of green products, enhanced interoperability, and reduced risks of greenwashing.
HKMA Chief Executive Mr Eddie Yue emphasised the significance of the taxonomy, stating, “The release of the Hong Kong Taxonomy for Sustainable Finance marks a key milestone for Hong Kong’s sustainable finance landscape.” He further highlighted its role in equipping market participants with a common language and framework for informed decision-making, driving impactful cross-border investments, and contributing to global efforts in combating climate change.
“Hong Kong’s Taxonomy for Sustainable Finance equips 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 Yue.
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