Climate Cooperation China
On behalf of the International Climate Initiative (IKI)

People’s Bank of China and European Commission present joint classification of sustainable finance

At the Annual Event of the International Platform on Sustainable Finance (IPSF) on 4 November, China and the EU presented the “Common Ground Taxonomy – Climate Change Mitigation” (CGT).

Taxonomies, detailed lists of sustainable economic activities, support investors to make long-term green and sustainable investment decisions and thereby facilitate green economic transitions. Furthermore, taxonomies can promote green investments by cutting the costs of the certification of cross-border activities.

The “Common Ground Taxonomy – Climate Change Mitigation” (CGT) includes a comprehensive comparison between the taxonomies for green and sustainable investments in China and the EU and thus a list of economic activities that may have a positive effect on the fight against climate change. The current CGT covers 80 activities across six sectors: Energy, manufacturing, construction, transport, waste management and forestry. The analysts compare the historical development of both taxonomies, their objectives, their scopes, their approaches of defining alignment and eligibility, their legal frameworks, as well as their classification frameworks.

A second part of the CGT is dedicated to the underpinning methodology of the comparison, which invites other researchers to conduct similar analyses.

Both partners have announced to further develop the CGT’s methodology in the coming year by including new sectors, formulating additional environmental objectives, and taking into account the work of the G20 Sustainable Finance Working Groups (SFWG).

The CGT is open for public comment until 4 January. The IPSF stems from a 2019 EU initiative.

Photo Credit: Pixabay, Pexels

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