The Monetary Authority of Singapore announces Multi-Jurisdiction Common Ground Taxonomy with China, EU. (Photo: MAS)
Singapore’s sustainable finance taxonomy is aligned with those of the European Union and China after it was launched at the end of last year.
This alignment will serve as a framework for investors to assess green economic activities across these three regions, helping facilitate cross-border sustainable capital flows and accelerate the transition to net-zero.
EU, China, Singapore establish multilateral standards
A Sustainable Taxonomy provides a classification list for financial institutions, businesses, investors, and certification bodies to guide sustainable investments. However, differing definitions across countries have often created barriers to cross-border investment. To address this, relevant organizations conducted a comprehensive comparison and developed a Common Ground Taxonomy (CGT).
The EU and China released the first version of the CGT in 2020, with one revision since. Now, with the inclusion of the “Singapore-Asia Taxonomy for Sustainable Finance,” it is referred to as the Multi-jurisdiction Common Ground Taxonomy (M-CGT).
The M-CGT covers 110 economic activities across eight sectors and will serve as a reference for other countries developing their own sustainable finance taxonomies. During the alignment launch, Ma Jun, chairman of the China Green Finance Committee, noted that Indonesia and Brazil have expressed interest in joining the M-CGT and are currently in discussions for the second round of integration.
Although the M-CGT is not legally binding, green bonds and funds that align with its criteria are still subject to local regulations. Gillian Tan, Head of Sustainability at the Monetary Authority of Singapore (MAS), stated that the creation of common standards helps alleviate investor concerns about greenwashing risks.
ASEAN updates taxonomy with new technical screening criteria
In addition to the EU and China, ASEAN released its own sustainable finance taxonomy in 2021 and updated it with the third version in April this year. The ASEAN Taxonomy for Sustainable Finance uses a multi-layered framework, offering both a principles-based foundation and detailed technical screening criteria for evaluating sustainable activities.
In terms of technical screening standards, the second version introduced criteria for the electricity, natural gas, steam, and air conditioning supply sectors. The third version adds standards for the transportation and storage, and real estate and construction sectors.
Notably, the updates focus on activities related to building construction and renovation, demolition and land clearing, property acquisition and ownership, as well as urban and freight transport, and infrastructure for land, water, and air transport, among others.
Source: The Straits Times、RSPRC、ACMF
