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The Singapore-Asia Taxonomy was launched in December 2023. The framework provides detailed thresholds and criteria for defining green and transition activities across eight key sectors, which represent 90% of Asia's greenhouse gas (GHG) emissions. The Singapore-Asia Taxonomy is a guiding framework that will benefit businesses, and financial institutions who adopt it by helping them to better manage climate risks and support their journey towards net zero.

The taxonomy's sophisticated traffic light classification system identifies activities as green (sustainable), amber (transitional), or red (ineligible) across various sectors. The sectors covered are Energy, Real Estate, Transportation, Agriculture and Forestry/Land Use, Industrial, Information and Communication Technology, Waste/Circular Economy, and Carbon Capture and Sequestration.

It aligns with five key environmental objectives, including climate change mitigation (the focus of the Taxonomy), climate change adaptation, biodiversity protection, resource resilience, circular economy, and pollution prevention and control. Additionally, it includes important 'Do No Significant Harm' (DNSH) criteria and social safeguards to ensure that environmental benefits do not come at the cost of social or other environmental harm.

However, implementing this taxonomy comes with its complexities. The detailed and industry-specific nature of sustainable finance taxonomies can be challenging for small and multinational firms that must navigate varying global regulations. Aligning and interpreting different standards adds to these challenges, especially for businesses operating across borders.

The Singapore-Asia Taxonomy provides a clear, actionable guide for financial institutions and businesses to realign their strategies, to foster a sustainable and impactful economy. Companies that embrace this taxonomy are expected to benefit.

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