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The ASEAN Taxonomy for Sustainable Finance Version 2 (The Taxonomy) was recently introduced by the ASEAN Capital Markets Forum (ACMF) in March 2023. The taxonomy is designed to standardize definitions and classifications of sustainable activities within the ASEAN region and to promote sustainable finance and investment opportunities in the region.
The Taxonomy focuses on environmental goals such as biodiversity conservation, climate change mitigation and adaptation, and pollution prevention and control. It also includes social objectives like gender equality, labor rights, and human rights.
The nations involved in this initiative are the 10 ASEAN member states: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
The timeline for implementation involves a phased approach, with large companies and financial institutions in ASEAN required to disclose their alignment with the taxonomy starting in 2025.
The legal implications of this taxonomy are that companies that do not comply with the taxonomy may be subject to legal penalties.
The ASEAN Taxonomy for Sustainable Finance Version 2 intersects with the EU taxonomy, which was introduced in 2021. The two taxonomies align in several areas, such as climate change mitigation and adaptation, but differ in others, such as the EU taxonomy's inclusion of nuclear energy. The Taxonomy also has common ground with other taxonomies like the Green Bond Principles and China Green Bond categories.
The implications of the Taxonomy for the market include increased transparency and comparability of sustainable investments and products, as well as increased access to sustainable finance for businesses within the ASEAN region. Overall, the ASEAN Taxonomy for Sustainable Finance Version 2 is an important step towards promoting sustainability in the ASEAN region, while also aligning with global efforts to create standardized definitions and classifications of sustainable activities.