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Sustainable Finance Taxonomy
December 3, 2023

The Monetary Authority of Singapore (MAS) has launched the Singapore-Asia Taxonomy for Sustainable Finance. This new system aims to define green and transition economic activities that contribute to environmental and climate-related objectives, helping to identify and allocate capital to sustainable projects and initiatives. The taxonomy covers eight sectors, which account for 90% of the region’s emissions.

Unique to this taxonomy is the introduction of a “transition” category and a “traffic light” system to distinguish between Green, Amber (transition), and ineligible activities. The “measures-based approach” encourages investment into decarbonization measures to support reductions in emissions intensity over time.

The taxonomy is particularly relevant for Asia, which is balancing a shift towards net zero with economic development, population growth, and rising energy demands. This is the first taxonomy to comprehensively define transition activities across eight focus sectors, filling a gap left by most taxonomies that only define what is green and brown.

The launch follows public consultation rounds and collaboration with the Green Finance Industry Taskforce (GFIT), an industry-led initiative focused on sustainable finance initiatives. The taxonomy takes an Asian perspective and offers a measures-based approach to defining transition activities, categorising them as “amber”. This framework aims to help financial institutions optimise their support for the transition of hard-to-abate sectors, particularly in Asia.

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