Policy Watch | September 2026

In August there was a notable development as the EU decided to step back from the next phase of the Common Ground Taxonomy (CGT) and Multi-Jurisdiction Common Ground Taxonomy (M-CGT) exercises. The European Commission cited limited evidence of practical market demand and significant resource requirements, while emphasising the need to preserve the distinct legal and technical features of the EU Taxonomy. The M-CGT had brought together the EU, China and Singapore to identify areas of commonality across their respective taxonomies, mapping 110 common activities and providing a useful reference point for cross-border green finance. While the EU’s decision may slow progress on this particular initiative, continued work by China and Singapore, alongside the EU’s engagement through the International Platform on Sustainable Finance, demonstrates the ongoing value of greater interoperability between taxonomies. For investors and issuers operating across markets, improving comparability remains important for reducing complexity, supporting capital flows and strengthening the credibility of sustainable finance markets.

Practical efforts to improve taxonomy interoperability are also advancing at market level, with Climate Bonds developing and piloting a methodology to recognise credible criteria from external taxonomies within the Climate Bonds Taxonomy and the Climate Bonds Standard and Certification Scheme. The approach is initially being piloted using the Australian Sustainable Finance Taxonomy and is intended to enable greater use of credible national taxonomy criteria while maintaining consistent climate integrity standards. For investors and issuers, this could help reduce duplication between different sustainable finance frameworks, making it easier to access labelled markets across jurisdictions and supporting the growth of cross-border climate finance. The initiative demonstrates how greater interoperability can be pursued through practical mechanisms that connect national taxonomies with globally applicable market standards.

India is considering whether to broaden the scope of its sustainable finance frameworks to support investment in nuclear energy, as the government targets a significant expansion of nuclear capacity over the coming decades. Stakeholders have called for nuclear projects to be recognised within the Sovereign Green Bond Framework, RBI’s green deposit framework and SEBI’s green debt securities rules, potentially opening additional channels of green and sustainable finance for the sector. The discussion comes as India seeks to expand nuclear power capacity to 100 GW by 2047, requiring substantial new investment and private-sector participation. For investors, the review could have significant implications for the eligible asset universe of India’s green finance market, while raising broader questions around how sustainable finance frameworks accommodate technologies that support decarbonisation, energy security and the transition to a lower-carbon power system.

The Tropical Forests Forever Facility (TFFF) could broaden the range of financing mechanisms available for nature and climate investment, with Brazil seeking to establish a large-scale investment vehicle capable of attracting international capital for tropical forest conservation. The UK has announced a £400 million loan to the Brazil-led initiative, which is designed to raise capital in international markets and generate investment returns, with proceeds used to provide payments to countries that maintain their tropical forests. The use of repayable financing provides an example of how public capital can be structured to support climate and nature outcomes while seeking a financial return. If successful, the model could provide a more durable source of finance for forest protection while demonstrating how investment structures can help mobilise capital towards global nature and climate objectives.