ICMA Publishes Overview of ‘Taxonomies’ for Sustainable Finance and Recommends Success Criteria

As the EU Taxonomy takes hold, discussions accelerate about international application and the role of international taxonomies for market-based, regulatory and prudential purposes. ICMA compares key features and methodologies of official taxonomies from the EU and China as well as those developing in Australia, Canada, Colombia, Singapore and South Africa. Influential market-based systems including the ICMA Green Bond Principles are also assessed. ICMA recommends criteria for taxonomies, stating they should be:

• Targeted in their purpose and objectives.
• Additional in relation to existing international frameworks.
• Usable by the market for all intended purposes.
• Open and compatible with complementary approaches and initiatives.
• Transition-enabled incorporating trajectories and pathways.