S'pore joins EU, China in wider green finance taxonomy

Singapore green bond and loan issuers could have easier access to European Union and Chinese investors if their debt instruments are aligned with an updated taxonomy spanning these three jurisdictions.

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Launched on Nov 14 at the COP29 climate summit in Baku, Azerbaijan, the expansion of the taxonomy to include Singapore would allow capital market participants to assess what economic activities could be considered green across the three jurisdictions.

The Multi-Jurisdiction Common Ground Taxonomy (M-CGT), as it is called, contains 110 economic activities across eight sectors—taken from the EU, China and Singapore taxonomies—that could be eligible for green financing.

It builds on earlier efforts to improve the interoperability of the EU and China taxonomies—the two biggest green finance markets globally. This means coming up with similar guiding principles across both taxonomies, so that the methods used to define green economic activities are comparable.

This led to the development of a bilateral CGT between the EU and China in 2020. An updated version in 2022 identified 72 activities across seven sectors that are green.

The mapping of Singapore's national taxonomy onto the CGT—one year after it was released at 2023's COP28 in Dubai—further enhances its interoperability.