The Green Finance Industry Taskforce (GFIT), convened by the Monetary Authority of Singapore, has published the second version of its green taxonomy for consultation.
The GFIT is an industry-led initiative comprising representatives from financial institutions, corporates, non-governmental organisations, and financial industry associations.
The aim of the taskforce is to speed up the development of green finance through developing a taxonomy, enhancing environmental risk management practices of financial institutions, improve disclosures, enhance environmental risk management practices of financial institutions and foster green finance solutions.
The taxonomy detailed thresholds and criteria for economic activities in the energy, transport and real estate sectors. It is also builds on GFITs earlier proposed taxonomy in 2021, as well as incorporating a user guide for financial institutions and companies to apply the taxonomy.
The three sectors highlighted in the taxonomy are part of the eight focus sectors – alongside agriculture and forestry/land use, industrial, information and communications technology, waste/circular economy, carbon capture and sequestration – that account for close to 90% of ASEAN greenhouse gas emissions.
According to MAS, the proposed thresholds and criteria can be used to classify an economic activity as green, amber or red to differentiate its contribution to climate change mitigation.
A green classification represents activities that contribute substantially to climate change mitigation by operating at net-zero, or are on a pathway to net zero by 2050. An amber classification represent transition and includes activities that are transitioning towards green or facilitating significant emissions reductions in the short term. Red classification refers to harmful activities not compatible currently with net zero.
GFIT plans to release the criteria and thresholds for the remaining five sectors for public consultation in late 2022, before finalising the full taxonomy in 2023.
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