SG-Asia Taxonomy

Summary: Singapore-Asia Taxonomy

Feb 14, 2024

The Monetary Authority of Singapore (MAS), in Dec 2023, launched the Singapore-Asia Taxonomy for Sustainable Finance (Singapore-Asia Taxonomy) – which sets out detailed thresholds and criteria for defining green and transition activities that contribute to climate change mitigation across eight focus sectors

Purpose: The Singapore-Asia Taxonomy is a science-backed framework that defines environmentally sustainable economic activities. It aims to guide investments towards a green and transition-focused economy in Singapore, the ASEAN region, and globally.

Focus: The Taxonomy aligns with Singapore's climate goals (Nationally Determined Contribution) and the Singapore Green Plan 2030. It primarily focuses on climate change mitigation but also outlines objectives for adaptation, biodiversity, resource resilience, and pollution control.

Key Components

• Environmental Objectives: Specifies the targeted environmental outcomes.

• Activity Classifications: Categorizes economic activities as "Green" (environmentally sustainable), "Amber" (transitional), or "Ineligible" (environmentally harmful).

• Technical Screening Criteria: Detailed, sector-specific requirements activities must meet to achieve a specific classification.

• Do No Significant Harm: Activities must not cause significant harm to other environmental objectives.

• In-Scope Sectors:
  
  

  1. Energy

  2. Transport

  3. Real Estate/Construction

  4. Industry

  5. Forestry

  6. Carbon Capture and Storage

  7. Information and Communications Technology (ICT)

  8. Waste

  9. Water

  10. Agriculture

Overview

The Singapore-Asia Taxonomy is a science-based framework designed to promote sustainable finance and a green economy in Singapore and the broader ASEAN region. It classifies economic activities into three categories:

1. Green: Activities that contribute significantly to climate change mitigation and meet stringent environmental criteria.

2. Amber: Transition activities that may not fully meet green criteria yet but are on a pathway to becoming more sustainable.

3. Ineligible: Activities that are harmful to the environment or not aligned with climate goals.

The Taxonomy provides detailed technical screening criteria for each sector, outlining specific thresholds and requirements that activities must meet to be classified as Green or Amber. It also addresses the "Do No Significant Harm" principle, ensuring that activities don't negatively impact other environmental objectives.

Objectives

1. Climate Change Mitigation [Focus of Dec 2023 version of Taxonomy]: The primary objective is to identify and promote economic activities that contribute substantially to mitigating climate change, while avoiding significant harm to other environmental goals. This includes promoting energy efficiency, renewable energy, and other low-carbon solutions.

2. Climate Change Adaptation: Future versions of the Taxonomy will expand to include criteria for activities that help adapt to the inevitable effects of climate change, such as resilient infrastructure and water management.

3. Protect Healthy Ecosystems and Biodiversity: The Taxonomy aims to encourage activities that contribute to the conservation and restoration of natural ecosystems and protect biodiversity.

4. Promote Resource Resilience and Circular Economy: This objective focuses on activities that conserve resources, reduce waste, and promote a circular economy, where materials are reused and recycled rather than discarded.

5. Pollution Prevention and Control: The Taxonomy aims to promote activities that reduce pollution and minimize environmental harm.

Key Uses

• Investors and financial institutions can use the Taxonomy to identify and assess green and transition projects and assets.

• Companies can use it to align their business activities with sustainability goals and access green financing.

• Policymakers and regulators can use it as a basis for developing policies and regulations that support a green economy.

Decision Tree Introduction

The Singapore-Asia Taxonomy uses a decision tree structure to help users easily determine the sustainability classification of projects and activities. Each sector has a dedicated decision tree that guides you through a series of questions based on the Taxonomy's criteria. Answering these questions helps you determine if your project qualifies as "Green," "Amber," or "Ineligible." You may find it useful to use our simplified version of decision tree as complementary exercise to gain clarity and enhance the speed of assessment. 

So, if you want to understand the potential sustainability classification of your project or activity within the Singapore-Asia Taxonomy, I invite you to explore the decision trees handcrafted for you by TalkSDG.

Disclaimer

Please note that this decision tree (and all other relevant content on this website) is a simplified representation of the Singapore-Asia Taxonomy, issued on 31/Dec/2023 by MAS. Interpretations of the Taxonomy are subject to error. This decision tree and relevant content is intended for informational and educational purposes only. The author is not liable for any errors or their potential consequences. Always consult the complete Taxonomy for the most accurate and up-to-date guidance.

Reference: singaporeasia-taxonomy-dec-2023.pdf