Fair Finance Asia hosted a public dialogue titled, ‘Enhancing sustainability standards and compliance: can developing green taxonomies bring Asia closer to this goal?,’ on 15 September 2021 as part of the 2021 Fair Finance Asia General Assembly.
The webinar opened the discussion on the challenges and opportunities in developing strong and impactful green and sustainable finance taxonomies within the Asian region, the need to promote broader and more inclusive consultations among the stakeholders in the process, and the applicability of the taxonomies being proposed.
- Lyn Javier, Assistant Governor, Bangko Sentral Ng Pilipinas
- Myriam Vander Stichele, Senior Researcher, Center for Research on Multinational Corporations (SOMO)
- Corrado Topi, Affiliated Researcher, Stockholm Environment Institute – Asia Center
- Yanqing Jia, Associate, Asia Pacific, International Capital Markets Association
- Bernadette Victorio, Programme Lead, Fair Finance Asia (moderator)
In order to stimulate and finance towards activities that effectively contribute to mitigating climate change or other sustainability objectives, there is a need for clear and standard definitions of relevant activities. Such classification system is called a “taxonomy” because it categorizes green or sustainable activities per sector, based on well-defined principles and criteria. Different countries and regions around the world have already started to propose, regulate, legislate or develop industry standards on what definitions are covered by a taxonomy that is used as part of a sustainable finance strategy. However, beyond definitions, there are many other key considerations that need to be taken into account to develop taxonomies that are effective and impactful, and those that can strategically steer the financial sector towards achieving the Paris climate goals and the UN SDGs.
Some of these considerations include:
- Technical screening: what is the overall approach and how comprehensive is the coverage, objectives, and contents of the taxonomy?
- Decision-making and consultation process: who are the main stakeholders leading and involved in every step of the taxonomy development?
- Applicability: is the taxonomy well-tailored for its intended use and users? What are the means of verifications and progressive update mechanisms?