The Current Landscape of Asia’s Various Green Taxonomy Systems

Investments and economic activities can either accelerate disasters or help protect our planet. To ensure they promote sustainability, it is important to provide clear guidelines, such as a green taxonomy. However, the interpretation and implementation of these guidelines vary across Asian countries. So, what does the current landscape of green taxonomies look like in the region?

Green Taxonomy for Sustainability

As we work to combat climate change and limit global temperature rise below the 1.5°C threshold, having standardization and clear policy guidelines is essential. To support this transition, many countries have developed green taxonomies that serve as frameworks for more environmentally sustainable activities.

Green taxonomy classifies economic activities as those that meet environmental goals and activities that are harmful to the environment. This way, resources and funding can be prioritized for environmentally friendly activities, with the ultimate goal of building a green economy and tackling climate change.

In the global context, green taxonomy varies among countries and often lacks common ground in criteria, impact metrics, and accounting standards. Sometimes, what is classified as green in one country may be considered harmful in another. 

IEEFA’s Report on Asia’s Taxonomies

A recent report from the Institute for Energy Economics and Financial Analysis (IEEFA) compares taxonomies from several Asian countries. It highlights how well these countries meet sustainability goals through clarity and transparency in their taxonomies. 

According to the report, key sectors covered across Asia’s taxonomies are primarily energy, power, and transportation. Still, differences exist in the level of comprehensiveness. For instance, Malaysia does not specify any particular sectors in its taxonomy, while Indonesia’s taxonomy focuses solely on the energy sector. Meanwhile, the report ranks Singapore’s taxonomy as the most comprehensive in Asia due to its wide range of sectors and detailed technical criteria. 

Furthermore, there is significant variation in the eligibility of fossil fuels across the region. While most taxonomies classify coal as non-green and high-carbon, Indonesia allows coal plants for mineral mining to support the energy transition. Meanwhile, Singapore, Hong Kong, Taiwan, and Thailand regulate natural gas and require its emissions to stay below a certain level to be considered green. In contrast, most other Asian taxonomies are more permissive to gas usage.

Ultimately, the report highlights a common issue among taxonomies in the region. Countries often overlook critical interconnected environmental objectives while focusing solely on specific goals. For instance, while these taxonomies may emphasize carbon reduction or promoting renewable energy, they frequently neglect aspects such as biodiversity protection and pollution prevention.

Multi-stakeholder Commitment for Sustainable Future

The existential threat of the climate crisis is growing more urgent every day, and its impacts are increasingly evident. A well-defined taxonomy promotes transparency among businesses and reduces the risk of greenwashing as we urgently transition to better practices. Therefore, governments, businesses, and investors should reaffirm their commitment to achieving clear end goals for lowering emissions and limiting global temperatures for a sustainable future.

Editor: Kresentia Madina &Nazalea Kusuma

Dinda Rahmania

Reporter at Green Network Asia | Website |  + postsBio

Dinda is an Assistant of International Partnerships at Green Network Asia. She holds a bachelor’s degree in International Relations from President University. As part of the GNA In-House Team, she supports the organization’s partnerships with international organizations, governments, businesses, and civil society worldwide through digital publications, events, capacity building, and research.

• Dinda Rahmania

  Finally Enforced: Understanding the UN High Seas Treaty
• Dinda Rahmania

  A Major Cause of Changing Rainfall Patterns
• Dinda Rahmania

  Revealing Progress and Gaps of Healthcare in Southeast Asia
• Dinda Rahmania

  Understanding the Impacts of Rising Temperatures on Early Childhood Development