Hong Kong Taxonomy Phase 2B Prototype: When climate risk is local, adaptation finance cannot be one-size-fits-all

Hong Kong Green Week 2026 begins today– and with it comes an important development for the future of sustainable finance. 

Investors, policymakers and business leaders are gathering to examine how finance can accelerate the shift towards a low-carbon, climate-resilient economy. But one question is becoming increasingly urgent: how can markets finance adaptation when climate risks vary so dramatically from one place to another? 

Hong Kong’s sustainable finance market is already expanding rapidly. By the end of 2025, cumulative sustainable RMB bond issuance through its offshore market had reached CNY328bn (USD48.2bn), reinforcing the city’s position as an international sustainable finance hub and a leading centre for offshore RMB activity. 

Yet market growth alone is not enough. Capital must be directed towards activities capable of delivering credible and measurable climate outcomes – and investors need clear, consistent guidance to identify them.   

That is where taxonomies come in. 

Against this backdrop, the Hong Kong Monetary Authority (HKMA) has today launched the Phase 2B Prototype of the Hong Kong Taxonomy for Sustainable Finance for public consultation. The consultation, which runs until 7 October 2026, proposes a practical and comprehensive approach to assessing climate adaptation, alongside new pathways for transition finance. 

The Climate Bonds Initiative is proud to continue its close collaboration with HKMA and to support the development of this important new phase of the Hong Kong Taxonomy. 
 

When climate risk is local, adaptation needs to be too 

The need for context-specific approaches to adaptation is becoming increasingly necessary in Hong Kong. 

This summer, the city experienced both record-breaking heat and exceptionally heavy rainfall. Temperatures reached an all-time record of 36.9°C in August, while July rainfall was more than twice the normal amount. Recent research from the Hong Kong Observatory has also found a significant increase in short-duration, highly localised heavy rainfall events. 

These extremes highlight a fundamental challenge for adaptation: climate risks vary by location, and so will the solutions have to be. 

Phase 2B responds to this challenge by introducing a Process-based Approach (PBA) as the backbone of its expanded adaptation assessment methodology. The PBA provides a structured process for assessing physical climate risks, developing and implementing adaptation measures, monitoring their performance and taking corrective action where needed. 

The approach combines consistency with flexibility, allowing adaptation projects to be developed and tailored based on the specific location and climate risks involved. Phase 2B also expands the Taxonomy’s pre-defined whitelist of adaptation measures and introduces a pre-defined non-whitelist covering measures such as shoreline protection and flood management. 
 

Where transition meets the real economy

Phase 2B also expands the Taxonomy’s coverage of green and transition activities across transportation, manufacturing, and waste. 

The new activities include areas such as air transport, iron and steel, basic chemicals, low-carbon technologies, batteries, and material recovery from non-hazardous waste. 

Together, these additions recognise that achieving a low-carbon economy requires more than financing activities that are already green. It also requires credible pathways for sectors and technologies that are central to the transition.  
 
Looking beyond climate 

Phase 2B also sets out four environmental objectives for future development: biodiversity, nature and ecosystem protection; sustainable use and conservation of water resources; pollution prevention and control; and resource efficiency and circular economy. Together with climate mitigation and adaptation, these establish the six environmental objectives that underpin the Taxonomy.  
 

Built for Hong Kong, connected to the wider sustainable finance landscape 

The development of Phase 2B considers scientific pathways, sectoral emissions profiles, decarbonisation goals, technology developments and financing needs, while balancing interoperability with international standards and local relevance.The public consultation is the next step in that process. Feedback will help inform the finalisation of Phase 2B and the development of subsequent phases. 

With Hong Kong Green Week underway, the Phase 2B consultation opens an opportunity for market participants to help shape how the Taxonomy evolves. The feedback gathered through this process will help inform the finalisation of Phase 2B and the Taxonomy’s future development. 

If you are in Hong Kong during Green Week and would like to discuss the Phase 2B Prototype or other developments in sustainable finance and taxonomies, our Climate Bonds delegation will be in the city throughout the week.  

Have your say: Find out more about the Phase 2B public consultation and submit your response. 

Explore our work: Discover Climate Bonds Initiative’s work on taxonomies around the world. 
 
‘Till the next time,  
Climate Bonds