Taxonomy 101: The practical guide to building credible frameworks

Taxonomies are a cornerstone of the sustainable finance ecosystem, enabling capital markets to define and identify sustainable investment opportunities that contribute to climate and environmental goals. They provide the structure that links national priorities with global commitments, ensuring that capital is channelled toward projects that genuinely support a low-carbon and resilient economy. 
 
As the sustainable finance market expands, so does the need for consistency and clarity. More than 60 sustainable finance taxonomies are now established or under development worldwide, reflecting strong momentum but also growing complexity. Governments and market participants increasingly need guidance that balances scientific rigour with practical application. 

To meet this need, the Climate Bonds Initiative has released 'Taxonomy 101', a comprehensive reference that covers the full scope of taxonomy development, including governance, design, implementation, and expansion and revision. 

Drawing on more than a decade of Climate Bonds’ technical experience, ' Taxonomy 101' offers a clear roadmap for developing credible, science-based, and interoperable taxonomies that drive real capital alignment with climate goals. 
 

Strengthening consistency and credibility

Taxonomies are more than policy tools; they are the backbone of sustainable finance. As the number of taxonomies expands, interoperability becomes crucial. Interoperability describes how taxonomies relate to each other through shared principles and scientific baselines, such as the Paris Agreement. While they may not be identical, interoperable taxonomies share a common structure and objectives that make them comparable and recognisable across borders.  

The goal of 'Taxonomy 101' is to build consistent and interoperable taxonomies by offering practical recommendations for each phase of development. It highlights, among other recommendations, the importance of inclusive governance, science-based thresholds and objectives, collaboration between regulators and market actors in implementing priority use cases, and regular reviews to ensure continued alignment with new technologies and transition pathways. 
 

Inside the guide 

The publication is structured around four key phases: governance, design, implementation, and expansion and revision. Readers will find guidance on how to establish effective governance arrangements, set and test science-based objectives, integrate taxonomies into financial products and disclosure frameworks, and update the taxonomy scope and criteria to stay in step with technological and markets evolutions. 

Designed for both taxonomy development and implementation practitioners, 'Taxonomy 101' is relevant to all taxonomies, regardless of where they are in their development journey. It also serves as a resource for financial and non-financial actors and policymakers seeking to understand how taxonomies operate and how they can be applied across a variety of market and policy contexts. 
 

Complementing global tools and guidance 

'Taxonomy 101' draws from Climate Bonds’ work with governments and institutions across Latin America, Europe, Africa, Asia, and the Pacific, helping to shape frameworks grounded in national contexts and aligned with international best practice. 

It builds on lessons learned through a decade of technical collaboration and adds to a series of tools launched during the past two weeks at Pre-COP and COP30, including the Principles for Taxonomy Interoperability, developed under the Roadmap for Advancing Interoperability and Comparability of Sustainable Finance Taxonomies (Taxonomy Roadmap Initiative). The Principles set out a high-level framework for enhancing coordination and comparability across jurisdictions, while 'Taxonomy 101' provides detailed and practical guidance to help put those principles into practice. 
 
As countries translate climate commitments into investment strategies, credible taxonomies will be essential to guide capital toward sustainable and resilient activities. 'Taxonomy 101' provides the structure and clarity needed to move from ambition to measurable impact. 

Explore 'Taxonomy 101' and learn how credible, science-based taxonomies can support the next phase of sustainable finance. 

Translated versions of the publication will be available soon.  

'Till the next time, 
Climate Bonds