Hong Kong Expands Sustainable Finance Taxonomy to Spur Green Capital

The Hong Kong sustainable finance taxonomy is being expanded as authorities seek to direct more private capital towards green and transition investments.

The Hong Kong Monetary Authority’s Phase 2B prototype increases the number of covered economic activities to 39 from 25, adding areas across transportation, manufacturing and waste management while introducing measures addressing climate adaptation.

The taxonomy provides criteria for determining whether particular economic activities contribute to sustainable development and is increasingly being used by banks and companies to guide financing, investment and broader sustainable-finance frameworks.

The latest phase also introduces transition pathways for hard-to-abate industries and covers technologies supporting emissions reductions, greener transportation and low-carbon fuels.

By broadening the framework, the HKMA aims to make it easier for financial institutions and investors to identify credible transition activities and channel capital towards projects supporting Hong Kong’s longer-term net-zero objectives.