Beyond taxonomy design: what drives uptake?

Taxonomies have become an important part of the sustainable finance landscape, with more than 60 taxonomies developed or under development around the world. Countries are developing them to define which economic activities can be considered environmentally sustainable and to give financial markets a common reference point. 

But publishing a taxonomy is only the beginning. 

What happens afterwards? Do banks, investors and companies actually use it? Does it become embedded in financial policy and products? And what helps move a taxonomy from a technical document into something that shapes capital flows? 

These questions are often less visible than the work of developing a taxonomy itself. Climate Bonds Initiative’s new research, “Taxonomy Uptake: Used or Shelved?”, looks at what happens after publication.

 Looking beyond taxonomy design 

The study examines 13 national green and sustainable taxonomies that had been operational for at least two years as of April 2026. Rather than assessing the quality of the taxonomies themselves, it looks at how widely they are being used in practice, and what factors appear to be associated with stronger uptake. The analysis was complemented by interviews with taxonomy developers and users. 
 
To measure this, the research developed a Taxonomy Uptake Index (TUI) based on 46 indicators across four areas: policy integration, market signals, incentives and support, and visibility and guidance. The resulting score reflects the breadth of a taxonomy’s use across these areas. A higher score therefore indicates broader uptake, not the scientific quality or environmental integrity of the underlying framework, and the two can diverge sharply. 
 
The spread across the sample is wide, but the dividing line is architectural rather than chronological. The highest-scoring jurisdictions have assembled a self-reinforcing stack: a mandatory requirement that makes classification unavoidable, financial incentives that make it commercially worthwhile, and taxonomy-linked products reaching retail and SME borrowers. Jurisdictions at the initial stage have generally published a credible document without attaching any of these, leaving adoption voluntary and largely unrewarded.

Incentives can make the difference 

Financial incentives were the variable most strongly correlated with taxonomy uptake in the study, ahead of taxonomy age, mandates and geographic or institutional factors. 

Taxonomies with at least one material financial incentive had a mean TUI score of 23.7, compared with 7.6 among those without one. Every jurisdiction with broader uptake combined mandatory classification with several incentives, including interest-rate subsidies, risk-weight reductions, credit guarantees and below-market refinancing.  

This does not mean that incentives alone explain uptake, or that the relationship is causal. The research identifies an association, supported by interviews and country examples, rather than proving a single formula for success. 

What it does suggest is that a taxonomy is more likely to gain traction when there is something in the financial system that gives users a reason to apply it. 

Mandatory classification and reporting can create the regulatory foundation and make activity visible. But financial incentives can help make taxonomy-aligned transactions commercially attractive.

 
A taxonomy needs an ecosystem around it

The findings also point to the importance of what happens around the taxonomy. 

Institutional ownership matters, but there is no single institutional model that guarantees uptake. Taxonomies housed by prudential supervisors or regulators tend to score more highly, but Indonesia and Sri Lanka show that regulatory ownership alone is not enough.  

The research also finds strong associations between uptake and the presence of taxonomy-aligned retail and small or medium-sized enterprise (SME) products, as well as dedicated, capitalised facilities that reference the taxonomy. These mechanisms can help translate a taxonomy into actual financing opportunities and provide early market signals.  

At the same time, implementation needs to reflect market capacity. Restrictive do-no-significant-harm requirements are associated with lower uptake in bank-dominated emerging markets. The finding does not argue for lowering technical standards, but for considering how requirements can be phased as markets and users develop the capacity to apply them.  

Visibility and practical guidance matter too. Registries, FAQs, user guides and training can help users understand and implement a taxonomy, but on their own, they are not enough to generate uptake.  

 
Publication to practice 

Taken together, the findings point to a broader lesson for taxonomy developers and policymakers: the work does not end when the taxonomy is published. 

The institutions responsible for a taxonomy need to consider where it sits in the financial system, how its use will be reported, what incentives can support adoption, whether its requirements match market capacity, and where the capital to finance taxonomy-aligned activities will come from. 

The research therefore recommends aligning taxonomy ownership with the channels through which green finance is expected to flow: pairing publication with mandatory classification and reporting, phasing technical requirements where appropriate, attaching material financial incentives and engaging development banks or other anchor sources of capital early in the process.  

Importantly, uptake is not the same as impact. A higher TUI score does not mean that a taxonomy is better designed or that it has caused greater emissions reductions. The research is a first step towards understanding implementation: whether taxonomies are being used, where they are gaining traction, and what conditions appear to support that use. 

For countries developing or updating taxonomies, that raises a practical question that goes beyond the taxonomy itself: what needs to be put around it for it to become part of the market? 
 
Understanding taxonomy uptake is an important step in understanding what helps taxonomies move from publication to practical use. As more countries develop and update their taxonomies, the focus will increasingly need to shift towards implementation, market application and interoperability. 

Read the full research to explore the findings from 13 countries and the factors associated with stronger taxonomy uptake. 
 
For organisations looking to understand, apply or navigate taxonomies across markets, Climate Bonds provides expertise and practical support to help turn taxonomy requirements into action. 

‘Till the next time,   
Climate Bonds