The Hong Kong Monetary Authority (HKMA) published the Phase 2A update of the Hong Kong Taxonomy for Sustainable Finance.
The release marks a significant expansion of the region’s green classification framework. The updated taxonomy now covers transition finance and climate adaptation, more than doubling its eligible economic activities from 12 to 25. By broadening its scope, Hong Kong signals a clear intent to mobilize capital toward high-emitting industries and bolster local climate resilience.
Widening the sectoral net:
The expansion adds manufacturing and information and communications technology (ICT) to the existing four sectors of energy, transportation, construction, and waste. These additions are critical for the decarbonization of the real economy. The framework now provides standardized criteria for 25 activities, including electricity transmission, district cooling, and low-carbon transport infrastructure. This growth ensures that a wider array of industrial projects can qualify for sustainable financing.
Transition finance: a structured path to net-zero
A central feature of the Phase 2A update is the introduction of a structured transition category. This enables investors to price and fund credible decarbonization pathways for carbon-intensive sectors. The HKMA has adopted a traffic-light classification system for climate mitigation. Green activities are those already aligned with a 1.5°C trajectory. The transition category supports activities on a time-bound journey toward net zero by 2050. Activities incompatible with these climate goals are marked for exclusion. To ensure scientific rigor, transition activities must meet specific sunset dates that vary by sector.
Adaptation and global interoperability:
For the first time, Hong Kong has introduced a climate change adaptation objective. This addresses the city’s vulnerability to extreme weather events like flooding and storm surges. Initially, the HKMA is using a whitelist approach to allow specific adaptation measures—such as water-monitoring equipment and resilient building materials—to qualify easily. This focus on resilience is paired with a commitment to global interoperability. The taxonomy aligns with international standards like the Common Ground Taxonomy (CGT) and the EU Taxonomy, ensuring that Hong Kong-labeled green assets are attractive to global institutional investors.
“The release of the Hong Kong Taxonomy for Sustainable Finance marks a key milestone for Hong Kong’s sustainable finance landscape. By providing a common language and framework, we are equipping market participants with an important tool to make informed decisions, drive impactful cross-border investments, and contribute to global efforts in combating climate change,” said Eddie Yue, Chief Executive, Hong Kong Monetary Authority (HKMA).
