Hong Kong Monetary Authority (HKMA) has initiated a public consultation on the Phase 2B prototype of the Hong Kong Taxonomy for Sustainable Finance, which will remain open until October 7, 2026.
The taxonomy serves as a crucial instrument enabling market participants to make well-informed decisions in green and sustainable finance. It establishes clear, transparent, and credible definitions for what constitutes green and sustainable activities, thereby facilitating capital flow and alleviating concerns about "greenwashing."
Since releasing the Phase 2A edition at the start of this year, the HKMA has been steadily refining the framework. After taking into account market feedback, public policy considerations, industry requirements, as well as the latest developments in technology and climate science, the Phase 2B prototype incorporates several enhancements designed to further advance Hong Kong's decarbonisation efforts, promote low-carbon transition across the region, and consolidate its role as an international financial centre and a leading hub for green and sustainable finance.
The key features of the Phase 2B prototype include: Expanding the coverage of "climate change mitigation" activities: Ten additional economic activities have been introduced, with technical criteria established for relevant green and transition activities and measures. The classification of certain activities under Phase 2A has also been adjusted, bringing the total number of economic activities from 25 to 39.
Accelerating the pace of regional transition: To channel funds into mitigation activities that are critical for expediting regional decarbonisation, and leveraging Hong Kong's position as a global financial centre, Phase 2B introduces essential "enabling technologies" that support other decarbonisation applications, such as the manufacturing and recycling of batteries and the production of low-carbon technologies. It also provides pragmatic transition pathways for hard-to-abate sectors including aviation and iron and steel manufacturing, directing capital to support their gradual decarbonisation.
Refining the assessment methodology for the "climate change adaptation" category: Climate adaptation is highly location-specific, and even when facing similar climate risks, the measures required may vary depending on specific circumstances and environmental factors. Accordingly, Phase 2B introduces a process-based assessment approach that, through a systematic framework, offers clear guidance to the market, ensuring that relevant measures both deliver substantive contributions to climate adaptation and effectively manage the risk of maladaptation.
Drawing on government guidelines, Phase 2B adds 24 adaptation measures (comprising 11 whitelisted and 13 non-whitelisted measures), initially focusing on coastal management and flood management, two areas closely related to Hong Kong's primary climate risks.