There is a multiplication of sustainable taxonomy development initiatives across the world. Developing these taxonomies can be viewed as a standard-setting race for achieving environmental, public policy, and broader political objectives.
On the one hand, countries adapt the European Union taxonomy and other international developments and best practices to the local context to accelerate sustainable investment through better data. On the other hand, the EU Taxonomy is viewed as a source of inspiration for closing the gaps in the existing taxonomy or including activities not covered in it. Additionally, pure green and transitional metrics will be identified and included in the taxonomy.
Besides these environmental goals, countries also pursue broader political goals when developing taxonomies. Some countries are locked in a race to govern through norms and indicators. In contrast, others assert positions as leaders in the fight against climate change or towards sustainability.
For instance, the United Kingdom is seeking to position itself at the forefront of green finance in the context of an already existing competition to make London or Paris green finance centers. Singapore is actively seeking to develop a green taxonomy that would be used by countries in the ASEAN (a member, Malaysia, has already published a Climate Change Taxonomy) and become the green finance hub of South-East Asia.
Canada and Chile are also developing taxonomies. The one being developed by Canada is specifically a transition taxonomy that could be used in high-emitting countries and even by the United States. The taxonomy being developed by Chile seeks to establish criteria for the mining and other extractive industries that could be used by other countries as well.
This standard-setting race could well be short-lived, and taxonomies would be harmonized and standardized. For example, the International Platform on Sustainable Finance, co-chaired by the EU and China, is to develop and publish a Common Ground Taxonomy in mid-2021.
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