Hong Kong Green Classification Framework

The Hong Kong Green Classification Framework (the "HK Taxonomy") provides a common language for classifying economic activities as environmentally sustainable, supporting the development of Hong Kong as a leading green and sustainable finance hub in Asia.

Developed by the Green and Sustainable Finance Cross-Agency Steering Group (co-chaired by the Hong Kong Monetary Authority and the Securities and Futures Commission), the framework was released for consultation in 2024. It draws on international best practices, particularly the EU Taxonomy, the ASEAN Taxonomy, and the Common Ground Taxonomy developed by the International Platform on Sustainable Finance.

Structure and Design

The HK Taxonomy covers four environmental objectives: climate change mitigation, climate change adaptation, pollution prevention, and biodiversity conservation. For each objective, the framework defines eligible economic activities, technical screening criteria for substantial contribution, and "do no significant harm" (DNSH) criteria to ensure activities do not adversely affect other environmental objectives.

The framework adopts a traffic light system with three categories: Green (activities that make a substantial contribution to environmental objectives), Amber/Transition (activities that are not yet green but are on a credible pathway), and Red (activities that cause significant environmental harm). This approach recognises the importance of transition finance for economies that are still heavily dependent on fossil fuels.

Priority Sectors

The initial phase of the HK Taxonomy focuses on sectors most relevant to Hong Kong's economy and climate goals, including power generation and distribution, transportation, buildings, water supply and waste management, and manufacturing. Additional sectors will be added in subsequent phases based on market needs and data availability.

Interoperability

A key design principle of the HK Taxonomy is interoperability with other taxonomies, particularly the EU Taxonomy and the Common Ground Taxonomy. This reflects Hong Kong's role as an international financial centre and the need for cross-border green finance flows. The framework aims to minimise fragmentation while accommodating local economic conditions and transition pathways.

Further Reading

• HKMA Green Finance — Regulatory initiatives
• Green and Sustainable Finance Cross-Agency Steering Group — Steering group updates

Related Topics

• EU Taxonomy
• ASEAN Taxonomy
• Green Taxonomies\n