The Hong Kong Monetary Authority (HKMA) is consulting on the development of a local green classification framework, aimed at increasing transparency and facilitating green finance. Its discussion paper emphasises the importance of a local green taxonomy in enabling consistent policymaking on green finance and fostering easy navigation across different taxonomies, such as the Common Ground Taxonomy (CGT) used in the EU and China. It will also support investor decision-making and help Hong Kong in its role of bridging green financial flows between the Mainland and the rest of the world, HKMA said. To develop the green classification framework, the HKMA has commissioned the Climate Bonds Initiative as an external consultant. The prototype taxonomy focuses on activities in the energy, transport, buildings, waste, and water sectors, demonstrating principles and ideas that can be further utilised for the creation of a comprehensive taxonomy. It comprises three layers of depth. The first layer maps activities to standardised industrial classification codes and categorises them as universally green or potentially green. The second layer identifies key metrics that companies/projects need to disclose to prove eligibility. The third layer proposes technical screening criteria and thresholds that can be applied in the Hong Kong context. Eddie Yue, Chief Executive of the HKMA, said: “By providing a standardised framework for classifying green financial products, we can enhance transparency and facilitate green investments, ultimately contributing to the transition to a more sustainable future.” The discussion paper and prototype taxonomy are open for public comments until 30 June.
— Regulation Asia (@RegulationAsia) May 31, 2023