Unifying Green Finance: The Quest for a Standard-neutral Taxonomy

Executive Summary

The sustainability market has been gaining traction, posing the need for a harmonized language in the Green Finance sector. This technical whitepaper investigates the necessity for a standard-neutral taxonomy that will streamline the environmental use of proceeds. It provides an in-depth analysis of China’s Green Bond Endorsed Project Catalogue and The Common Principles for Climate Mitigation Finance Tracking, with the intent of establishing common ground in their methodologies.

The document is the product of an insightful collaboration between the European Investment Bank and the Green Finance Committee of China Society for Finance and Banking, published on November 11, 2017. By comparing and mapping these two financial practices, the whitepaper aims to shed light on the importance of improving clarity in green finance.

Technical Overview

The whitepaper dissects the policy framework for green finance, focusing on G20 initiatives, PRC’s policy and regulatory initiatives, and EU’s policy and regulatory initiatives. The importance of use-of-proceeds taxonomies for improving clarity in green finance is highlighted, emphasizing the need for completeness, precision, and comparability.

System Architecture

Following the technical overview, the whitepaper presents how China’s Green Bond Endorsed Project Catalogue and the MDB-IDFC list of climate mitigation activities are mapped and compared. The whitepaper also explores the existing practices of external reviewers and international financial institutions (IFIs), providing initial feedback from ongoing consultations with these entities.

Implementation Details

The whitepaper delves deeper into the comparison of the two financial practices, detailing the mapping and comparing of policy objectives, climate change mitigation activities, and screening criteria for climate change mitigation activities. The practices of external reviewers and IFIs are also examined, with feedback from consultations shedding light on the current status of green finance.

Conclusion

In conclusion, the whitepaper provides final thoughts and recommendations on the need for and the road towards a common language in Green Finance. It emphasizes the need for a standard-neutral taxonomy for environmental use of proceeds, aiming to accelerate the progress of sustainable finance across the world.