Assessing International Interoperability and Usability of the South African Green Finance Taxonomy

This technical report, prepared for the South African National Treasury by the Climate Policy Initiative and GreenCape, evaluates the international interoperability and usability of the South African Green Finance Taxonomy (SA GFT). The analysis focuses on three core pillars: Make a Substantial Contribution (MSC), Do No Significant Harm (DNSH), and Minimum Social Safeguards (MSS). While the SA GFT shows strong alignment with global standards in its environmental objectives and sectoral coverage, it faces significant challenges in the practical application and measurability of its DNSH and MSS criteria. The report recommends introducing more flexible alignment classifications, increasing the use of quantitative thresholds, and integrating existing national social regulations to enhance the taxonomy's usability and attractiveness for international investment.

• The South African Green Finance Taxonomy (SA GFT) demonstrates high international interoperability and alignment, particularly through its broad coverage of environmental objectives, economic sectors, and activities, and its prioritisation of climate change mitigation.
• The SA GFT's 'Make Substantial Contribution' (MSC) pillar is well-aligned with international norms, as it and other analysed jurisdictions prioritise climate change mitigation and adaptation to meet Paris Agreement goals.
• The 'Do No Significant Harm' (DNSH) pillar is a major barrier to the SA GFT's effective application due to an 'all-or-nothing' approach where any failure to meet DNSH criteria results in total non-alignment.
• DNSH criteria in the SA GFT suffer from poor measurability and understandability, often relying on generic criteria and subjective language (e.g., 'minimise', 'maximise') rather than quantitative thresholds.
• The construction sector is the best performing sector regarding DNSH, with 56% of criteria providing quantitative thresholds and 69% referencing domestic regulations.
• The energy and water/waste sectors show significant gaps in DNSH implementation, with only 13% and 8% of criteria providing quantitative thresholds, respectively.
• The SA GFT's Minimum Social Safeguards (MSS) are grounded in South African laws (such as the Labour Relations Act) and international guidelines (such as the OECD Guidelines on Multinational Enterprises), but lack specific tools and metrics for compliance assessment.
• To improve DNSH usability, the report recommends moving away from the 'all-or-nothing' approach toward an 'eligible vs aligned' system, similar to the 'Limited Alignment' approach used in Rwanda.
• The report suggests integrating the Broad-based Black Economic Empowerment (B-BBEE) Act 53 of 2003 and the Women Empowerment and Gender Equality Bill of 2013 into the MSS framework to better reflect the local context.
• Current governance and disclosure frameworks for the SA GFT lack clarity regarding roles and responsibilities, and there is a lack of compliance incentives to drive adoption.
• The report recommends establishing a domestic SA GFT Working Group comprising policymakers, financial institutions, and sector experts to oversee the taxonomy's ongoing maintenance and refinement.

APA

Climate Policy Initiative (n.d.). Assessing International Interoperability and Usability of the South African Green Finance Taxonomy. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/02/Assessing-International-Interoperability-and-Usability-of-the-South-African-Green-Finance-Taxonomy.pdf

Chicago

Climate Policy Initiative. Assessing International Interoperability and Usability of the South African Green Finance Taxonomy. n.d. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/02/Assessing-International-Interoperability-and-Usability-of-the-South-African-Green-Finance-Taxonomy.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Assessing International Interoperability and Usability of the South African Green Finance Taxonomy |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2025/02/Assessing-International-Interoperability-and-Usability-of-the-South-African-Green-Finance-Taxonomy.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiativendassessing, author = {{Climate Policy Initiative}}, title = {{Assessing International Interoperability and Usability of the South African Green Finance Taxonomy}}, institution = {Climate Policy Initiative}, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/02/Assessing-International-Interoperability-and-Usability-of-the-South-African-Green-Finance-Taxonomy.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }