On 30 May 2023, the Hong Kong Monetary Authority (HKMA) released a discussion paper titled “Prototype of a Green Classification Framework for Hong Kong” seeking feedback on developing and adopting a green taxonomy for Hong Kong. In an effort to support Hong Kong’s role in linking green financial flows between Mainland China and the rest of the world, HKMA aims to develop a green taxonomy which facilitates interoperability with other major taxonomies such as the Common Ground Taxonomy (CGT), and the taxonomies of Mainland China and the European Union (EU). 

Developing the interoperability feature of the proposed Hong Kong taxonomy is key as the CGT is not a single taxonomy and certain of the criteria in the Mainland China and EU taxonomies are only usable within their respective jurisdictions.  Accordingly, the challenge has been to formulate a set of economic-activity criteria which match the ambition of those criteria outlined in the CGT and the Mainland China and EU’s taxonomies. The HKMA has commissioned Climate Bonds Initiative to assist in the development of the Hong Kong green taxonomy.

The proposed Hong Kong taxonomy will be developed in phases. The current phase aims to develop the prototype for the Hong Kong taxonomy (Prototype) for four initial sectors, namely, (1) Electricity, Gas, Steam and Air Conditioning Supply; (2) Transportation and Storage; (3) Water supply; sewerage, waste management and remediation activities; and (4) Construction.  A total of 12 Prototype activities for these four sectors have been selected as a starting point.

In addition, the Prototype aims to provide three layers of ‘depth’ in providing green definitions of varying extents of precision, taking into account the complexity of the Prototype activities and local circumstances. The three layers are:

  • Layer 1: mapping activities to standardised industrial classification codes and classifications;
  • Layer 2: identifying key metrics based on existing global guidance and other national or regional taxonomies; and
  • Layer 3: proposing technical screening criteria that can be applied to an activity.

For further details regarding the design and structure of the Prototype and proposed next steps in its development, please view the HKMA discussion paper here. The consultation ends on 30 June 2023. Following the consultation, the HKMA plans to summarise the consultation with recommendations on next steps around Q3/2023.

For additional background regarding recent taxonomy development efforts in Asia, please see our earlier blog posts here (ASEAN), here (Singapore) and here (Malaysia).

Photo of Mark Uhrynuk Mark Uhrynuk

Mark Uhrynuk is a partner of Mayer Brown resident in the Hong Kong office. Mark represents assets managers, family offices and other investor groups, corporations, and financial institutions in a variety of transactional matters. His wide-ranging experience includes private equity and venture capital…

Mark Uhrynuk is a partner of Mayer Brown resident in the Hong Kong office. Mark represents assets managers, family offices and other investor groups, corporations, and financial institutions in a variety of transactional matters. His wide-ranging experience includes private equity and venture capital investment and related financings; cross-border mergers, acquisitions, divestitures, joint ventures and strategic alliances; investment fund matters, including the formation of private equity, infrastructure and real estate funds; and international equity and debt capital markets transactions.

Mark is a key contact point for the ESG Initiative within the Mayer Brown network and is a founding member of the Firm’s ESG Steering Committee.  Mark also co-leads the Firm’s Family Office Initiative in the region.  An active thought leader in these fields, Mark has been widely quoted by the leading media and has authored a number of articles and legal updates on these and related topics.

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