ASEAN publishes first version of sustainable finance taxonomy

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The first version of the taxonomy has four environmental objectives and two essential criteria for the assessment of economic activities as a basis for protecting the environment and helping the transition to low-carbon and sustainable practices.

It also includes an approach guiding users in classifying economic activities under the “foundation framework” and providing additional sectoral guidance for Member States and entities seeking more specific guidance. A “stacked approach”, which is also included in the taxonomy, will be used to determine technical thresholds and filtering criteria under the “plus standard”.

John Yeap of Pinsent Masons said: “In order to encourage capital seeking green investments to cross national borders, there must be a common understanding of what is green. Investors in Singapore, for example, looking to deploy capital in projects in, for example, neighboring Malaysia, should be aware that Malaysia would have a similar approach to defining green. A common ASEAN approach will seek to facilitate interregional capital flows. Ultimately, the goal must be the adoption of a global standard to remove taxonomy as a possible barrier to cross-border and cross-regional investments. “

ASEAN member states and stakeholders who need more guidance can adopt the “plus standard” based on their individual readiness.

The ASEAN Taxonomy, published by the ASEAN Taxonomy Board (ATB) at COP26, is a collaborative initiative of ATB. The ATB comprises the ASEAN Capital Markets Forum (ACMF), the ASEAN Insurance Regulators Meeting (AIRM), the ASEAN High Level Committee on Financial Integration (SLC) and the ASEAN Working Committee on Capital Market Development (WC-CMD).


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