Operationalising interoperability through an expanded Climate Bonds Taxonomy and Certification Scheme

Sustainable finance is evolving rapidly across jurisdictions. As more countries develop green and sustainable finance taxonomies, interoperability across frameworks is becoming essential to maintaining investor confidence and accelerating climate-aligned investment. 

In response, Climate Bonds is proposing an expansion of the Climate Bonds Taxonomy and the Climate Bonds Standard & Certification Scheme through the recognition of credible criteria from external taxonomies, starting with the Australian Sustainable Finance Taxonomy as a pilot.  

The proposal, which is reflected in the updated version 4.4 of the Climate Bonds Standard and is now open for public consultation, aims to rapidly broaden the range of sectors, activities and measures recognised by Climate Bonds in the Climate Bonds Taxonomy, expanding eligibility for Certification while maintaining the scientific rigour that underpins its approach. 

Integrating criteria from local taxonomies into the Climate Bonds Standard 

The update to the Climate Bonds Standard builds on the ongoing updating and expansion of the Climate Bonds Taxonomy, which continues to broaden its science-based coverage across the global economy.  

It will  allow local taxonomy criteria to be incorporated into the Climate Bonds Taxonomy, and those criteria to be used to assess the eligibility of projects and assets for Climate Bonds Certification, where those criteria have been evaluated as climate-science aligned as per the principlesin the draft Climate Bonds Equivalence Methodology for Climate Mitigation.  

In practice, issuers can utilise Climate Bonds Sector Criteria, approved external taxonomy criteria, or a combination of both when demonstrating eligibility for Certification.  

This approach reflects a broader strategic objective:  

• Rapidly expand the universe of Certified bonds and projects to sectors and investment types for which local taxonomies provide rigorous locally-contextualised criteria, standards and proxies.  
• Maintain a single, trusted Certification label applicable at regional as well as global level 
• Establish the Climate Bonds Taxonomy as a practical tool for interoperability, helping users to navigate a diversity of localised criteria and scale climate-aligned investment across jurisdictions. 

How equivalence would work?

At the heart of the proposal is Climate Bonds’ Equivalence Methodology for Climate Mitigation, a set of transparent principles and a governance process for assessing external taxonomy criteria. External criteria will be incorporated into the Climate Bonds Taxonomy, and by extension the Climate Bonds Standard, where they comply with the equivalence principles, including scientific grounding, alignment with 1.5°C or well below 2°C trajectories, avoidance of fossil-fuel lock-in, and transparent governance. This includes an independent review by the Standards Board, approval and public consultation.  

The Australian Taxonomy pilot 

The Australian Sustainable Finance Taxonomy, released in 2025, has been selected as the first pilot due to its central role as the sustainable finance reference in the Australian market and Climate Bonds’ close involvement in its development.    

Nicole Yazbek-Martin, Executive Manager: Standards and Market Practice, Australian Sustainable Finance Institute, said: 

"ASFI warmly welcomes Climate Bonds Initiative's proposal to expand the Climate Bonds Taxonomy and Certification Scheme using an equivalence approach, with the Australian Sustainable Finance Taxonomy selected as the inaugural pilot. As the custodian of the Australian taxonomy and the organisation that led its development in partnership with the Australian Government, this is a development we are particularly encouraged to see. 

This proposal creates a clear and credible mechanism for expanding the Climate Bonds Taxonomy and Certification Scheme to cover Australian taxonomy-aligned transactions, supporting global interoperability and market adoption of the taxonomy and deepening the pipeline of certified sustainable finance activity in Australia. ASFI looks forward to engaging actively with this consultation and encourages Australian market participants — issuers, investors, and verifiers alike — to do the same." 

Screening has identified a wide range of localised criteria for sectors already represented in the Climate Bonds Taxonomy and Certification Scheme (including renewable energy, transport, buildings, manufacturing, and electrical grids and storage) that are compliant with the Equivalence Methodology and indeed in very close convergence with existing Climate Bonds Sector Criteria. Further, additional criteria for activities in the Australian Taxonomy not currently represented in the Climate Bonds Taxonomy or Standard & Certification Scheme but assessed as compliant with the Equivalence Methodology, such as aviation and mining, may be incorporated for global application, subject to public consultation and input from industry experts.  This inclusion of new globally applicable criteria and localised variants of existing global criteria would represent a significant expansion of Taxonomy and Certification coverage.  

The proposed v4.4 update therefore represents a strategic step toward a more connected, comprehensive and credible global sustainable finance system.  

Have your say in the public consultation 

Climate Bonds is inviting stakeholders across finance, policy, and industry to provide feedback on the proposed updates to the Climate Bonds Taxonomy and the Climate Bonds Standard, including the draft Climate Bonds Equivalence Methodology for Climate Mitigation that underpins the incorporation of criteria from external taxonomies.  

Feedback is also welcome on the specific proposals incorporations from the Australian Sustainable Finance Taxonomy, as detailed in the External Taxonomy Equivalence Register (ETER), which sets out the Australian Taxonomy activities and measures that have been assessed, together with their equivalence determinations. In particular, we encourage comments on activities and measures in sectors not previously included in the Climate Bonds Standard, such as mining and aviation, and the appropriateness of applying these criteria through the Certification Scheme. 

Input from market participants will help ensure that version 4.4 delivers both robust scientific integrity, and practical usability across diverse regional markets.   

Want to learn more or contribute? 

Access the consultation materials and submit your feedback via the Climate Bonds website.  

For questions related to Certification, contact certification@climatebonds.net  

For media enquiries, contact leticia.braga@climatebonds.net  

Useful documents:  

• Draft for consultation: Climate Bonds Standard v4.4
• Draft for consultation: Climate Bonds Equivalence Methodology – Climate Mitigation  
• External Taxonomy Eligibility Register (ETER)
• Resources webpage (Public explainer and FAQ)

Till next time,  

Climate Bonds