Hong Kong’s Prototype of a Green Classification Framework is a taxonomy that applies to all regulated banks under the Hong Kong Monetary Authority (HKMA). A green taxonomy is essential within each financial market as it defines a common language and criteria for assessing the environmental sustainability of financial products and investments. As with the EU Taxonomy and other similar initiatives, this framework enables investors to identify and invest in activities that contribute to environmental objectives while avoiding those that harm them.
To further demonstrate the interconnectedness of the global financial markets and the planet’s fate, Mainland China and the European Union have established the Common Ground Taxonomy (CGT) initiative under the International Platform on Sustainable Finance (IPSF). Any synergies – whether premeditated or accidental – across the avalanche of taxonomies swirling around the financial industry, would be a welcome respite for banks of all sizes and resources.
The introduction of this taxonomy impacts functional, technical, and architectural areas in a financial institution; and not just because there are so many of them (ASEAN, EU, etc.). Functionally, the Climate Bonds Initiative covers regulatory classifications financial institutions will have to consider a global taxonomy architecture with local regulations embedded.
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