Climate Change and Principle-based Taxonomy

The Discussion Paper on Climate Change and Principle-based Taxonomy was issued on 27 December 2019 to facilitate financial institutions in assessing and classifying economic activities that contribute to climate change mitigation and adaptation. The Bank received written feedback from respondents, including financial institutions, asset management companies, rating agencies and non-governmental organisations, during the consultation period. The Bank has since been working collaboratively with the Joint Committee on Climate Change (JC3) Risk Management Sub-Committee to incorporate the feedback received and enhance the discussion paper.

The final issuance of the Climate Change and Principle-based Taxonomy guidance document features major enhancements in the following areas:

• Strengthened the guidance document with the introduction of a progressive system of transition categories (Climate Supporting, Transitioning and Watchlist) to acknowledge concrete transition efforts and commitments by businesses to adopt sustainable practices; and

• Provided greater clarity and guidance for the assessment of guiding principles including the incorporation of broader environmental outcomes through the principle of no significant harm, with specific focus on how business operations affect pollution, biodiversity and resource efficiency.

Financial institutions can refer to the first cohort of the Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) Sectoral Guides on Palm Oil, Renewable Energy and Energy Efficiency for guidance on sectoral/ activity-based metrics, and climate-related and environmental risks mitigation measures. The second cohort of the VBIAF Sectoral Guides on Oil and Gas, Construction and Infrastructure, as well as Manufacturing sector will be published by the end of 2021.

The VBIAF Sectoral Guides on Palm Oil, Renewable Energy and Energy Efficiency can be accessed through this link:

https://aibim.com/value-based-intermediation

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