Global green taxonomy development, alignment, and implementation

This report analyzes the global development of green taxonomies, highlighting three main approaches: whitelist-based, technical screening criteria (TSC), and principle-based. It focuses on the alignment between the EU and China taxonomies, noting that while the EU emphasizes six environmental objectives and strict 'do no significant harm' (DNSH) criteria, China focuses on three broader objectives aligned with its national pollution and climate goals. The report emphasizes the Common Ground Taxonomy (CGT) as a tool to reduce market fragmentation and facilitate cross-border investment. It also discusses implementation, noting mandatory disclosure requirements in the EU and mandatory labeling for onshore green bonds in China.

• Green taxonomies are developed using three primary methodological approaches: whitelist-based, technical screening criteria (TSC) based, and principle-based. The whitelist approach, used by China, Mongolia, and Russia, lists specific green technologies. The TSC approach, used by the EU, South Africa, and South Korea, uses technology-neutral thresholds to determine substantial contributions to environmental goals. The principle-based approach, exemplified by Japan and Malaysia, defines core guiding principles for market participants.
• The EU and China taxonomies differ in their environmental objectives and design priorities. The EU taxonomy focuses on six environmental objectives and employs a strict 'do no significant harm' (DNSH) principle to exclude activities that harm any of the other five objectives. In contrast, China's taxonomy focuses on three broader objectives—environmental improvement, climate change response, and resource efficiency—and manages climate change alongside pollution control, reflecting its specific national policy priorities.
• The International Platform on Sustainable Finance (IPSF) developed the Common Ground Taxonomy (CGT) to align the green definitions of the EU and China. The CGT covers mitigation activities across six industrial sectors: forestry, manufacturing, energy, construction, transportation, and waste management, as well as hydrogen storage and underground permanent geological storage of carbon dioxide. It aims to reduce verification costs and facilitate cross-border green capital flows.
• Implementation of taxonomies varies by jurisdiction. In the EU, the taxonomy is linked to mandatory disclosure for large companies under the Non-Financial Reporting Directive (NFRD), requiring reports on the proportion of turnover, CAPEX, and OPEX aligned with the taxonomy. In China, the Green Bond Endorsed Projects Catalogue (2021 Edition) is mandatory for onshore green bond issuers to be labelled green.
• Taxonomies provide critical utility for financial intermediaries and entities by reducing greenwashing risks and improving market integrity. They are used for product development (such as taxonomy-themed funds), risk management, and branding. For entities, they help communicate climate-related risk exposure and can provide first-mover access to cheaper green financing.

APA

Xu, X., Xie, W., & Deng, M. (2022). Global green taxonomy development, alignment, and implementation. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/Global-Green-Taxonomy-Development-Alignment-and-Implementation.pdf

Chicago

Xu, Xiaoyun, Wenhong Xie, and Manshu Deng. Global green taxonomy development, alignment, and implementation. Climate Bonds Initiative, 2022. https://www.climatebonds.net/files/documents/publications/Global-Green-Taxonomy-Development-Alignment-and-Implementation.pdf.

Wikipedia

{{cite report |last1=Xu |first1=Xiaoyun |last2=Xie |first2=Wenhong |last3=Deng |first3=Manshu |title=Global green taxonomy development, alignment, and implementation |publisher=Climate Bonds Initiative |date=February 2022 |url=https://www.climatebonds.net/files/documents/publications/Global-Green-Taxonomy-Development-Alignment-and-Implementation.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{xu2022global, author = {Xu, Xiaoyun and Xie, Wenhong and Deng, Manshu}, title = {{Global green taxonomy development, alignment, and implementation}}, institution = {Climate Bonds Initiative}, year = {2022}, month = feb, url = {https://www.climatebonds.net/files/documents/publications/Global-Green-Taxonomy-Development-Alignment-and-Implementation.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }