Singapore and Rwanda Taxonomies Launched off the back of COP28
Singapore and Rwanda have stepped up their sustainable finance efforts by announcing the launch of national green finance taxonomies. The welcome news arrived during COP28, as nations convened to mobilise global action on climate change.
10 years ago, the idea of a 'Taxonomy' had barely entered the finance vernacular, now they are a must have for any nation serious on climate capital. Taxonomies have since spread across several countries in every continent. They act as a shopping-list for a green future, helping to spur green finance, and ensure investors can be confident about the quality of their green investments.
Climate Bonds has been honoured to provided technical assistance for several of the taxonomies that have been developed across the world. Even today our taxonomy department continues to help develop more and more new taxonomies, including a consultation role in the newly launched Singapore and Rwandan Taxonomies.
“Taxomania” in Asia, as Rwanda Rallies Africa
Across the globe, green taxonomies are catalysing climate investment in a crucial moment for the world’s fight against climate catastrophe. Climate Bonds is backing governments to adopt these tools as part of efforts to hit climate targets.
In 2023, Asia has seen a great deal of progress, with Singapore’s taxonomy following the launch of Thailand’s Taxonomy earlier in the year, and Hong Kong poised to release a taxonomy of their own in the coming months.
Rwanda becomes only the second African Nation to put a green finance taxonomy place, with South Africa being the first. Africa sits as the continent with the least amount of sustainable debt issuance to date, but the development of taxonomies marks a positive step to attract investment.
Both frameworks offer added value to the ongoing, global discussions on how to advance the design of taxonomy architecture. Singapore taxonomy focused on operationalisation of traffic-lights approach also enabling alignment of investments in individual measures and not only entire activities - all that to better incorporate and help to mainstream transition finance for hard to abate sectors.
Rwanda taxonomy on the other hand is the first taxonomy developed for a country classified as Least Developed Country. Not only does it adjust for that context - specificity of the economy (e.g. agriculture criteria include special provisions for smallholder farmers); but also, it is likely to be closely linked with, and used for, structuring of the development aid provided by international agencies.
Looking ahead: Taxonomies in 2024
17 taxonomies have already released and there are more than 30 already in a development or discussion stage. Most taxonomies are nationwide, but there are exceptions, such as regional taxonomies adopted by the European Union and the ASEAN region.
We predict that 2024 will be another big year for taxonomy development. Climate Bonds is looking forward to being on hand to as more nations stack the building blocks of their sustainable finance future.
Climate Bonds are also looking forward to developing their own Resilience Taxonomy. This will aim to guide investment towards equipping nations with infrastructure to safeguard against climate change. This year, we released a Resilience Taxonomy White Paper to set the foundations of this crucial coming project.
The end of Q3 of 2023 finished with the news that the green bonds had hit a lifetime milestone of $2.5tn in issuance, and collectively Green, Social, Sustainability, Sustainability-Linked and Transition debt had passed the $4trillion milestone.
As sustainable finance taxonomies are key to promoting investor confidence and guiding good climate practice in capital markets, we celebrate the proliferation of these instruments as a driver in climate investment and creating a better future for our planet.
‘Til next time
Climate Bonds
