The Hong Kong Monetary Authority (HKMA) recently announced the publication of “phase 2” for its sustainable finance taxonomy. The second phase expands the taxonomy into new industries and introduces new categories for investments. ESG Today reports:
“Among the most significant changes in the new updated Taxonomy is the addition of categories focused on climate transition, expanding the Taxonomy from its initial focus on only green categories. With the update, the Hong Kong Taxonomy now categorizes climate mitigation activities as Green, indicating that they either already operate at net zero emissions or are aligned with a 1.5°C pathway; Transition, indicating that they are carbon-intensive activities that are on a time-bound decarbonization pathway to align with a 1.5°C trajectory that will ultimately reach net zero in 2050, or; Exclusion, indicating that they are not currently eligible under the Taxonomy, as they are either not aligned with Green or Transition criteria, are incompatible with a 1.5°C future, or are of low climate materiality, with minimal relevance to climate objectives.”
Taxonomy regulations have become increasingly popular after the EU first introduced its flagship legislation. However, it hasn’t always been easy for regulators to nail down the specifics. The HKMA notes that its taxonomy is a living document, designed to adapt to the market’s evolving needs. The HKMA is wasting no time and has announced that work on the next phase of the taxonomy has already begun.
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