Malaysia’s Securities Commission (SC) has been at the forefront of shaping the Asean Taxonomy, a comprehensive framework guiding regional green finance efforts. This initiative, developed by the Asean Taxonomy Board—which includes central banks and regulators from various sectors—seeks to bring clarity and structure to sustainable investments across Southeast Asia.
The Asean Taxonomy, launched in 2021, was designed to accommodate the diverse economic landscapes of the region by offering a multi-tier approach to assessing sustainable finance activities. According to SC Chairman Datuk Mohammad Faiz Azmi, this system incorporates both qualitative and quantitative assessments. The “Principles-based Foundation Framework” enables a broad qualitative evaluation across all sectors, while the “A Plus Standard” offers more precise quantitative assessments in six targeted industries.
One of the unique features of the Asean Taxonomy is its traffic light system, which categorizes activities based on their environmental impact. The inclusion of an amber category, representing activities that are not fully green but are transitioning toward sustainability, reflects the pragmatic approach taken by the Asean Taxonomy Board. This system is vital for economies at different stages of their sustainability journey, ensuring that even partial progress is recognized and encouraged.
Speaking at the Skrine Conference 2024, Faiz emphasized the growing importance of taxonomies as powerful tools for steering investments toward long-term sustainability goals. “We have seen a surge in taxonomy developments across jurisdictions, driven by the need for consistency and clarity,” he stated. He pointed out that since the release of the first version of the Asean Taxonomy, countries like Malaysia, Indonesia, Thailand, and the Philippines have introduced their national taxonomies rooted in the Asean framework.
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