Green Taxonomies in the Global South

The document argues that while green taxonomies are not a standalone solution for financing the energy transition, they serve as a critical 'building block' for establishing credibility and standardising green definitions to attract international investment. It highlights the tension between 'interoperability'—the ability for taxonomies to work across borders—and 'usability'—the practical application within local contexts where data may be limited. The brief recommends a phased approach, starting with climate mitigation and incorporating adaptation and resilience objectives using international guidance to avoid fragmentation. It emphasizes that taxonomies must be integrated into broader policy frameworks, including de-risking tools and currency hedging, to effectively steer capital toward sustainable activities in emerging economies.

• Emerging economies face a significant financing gap, requiring an estimated $2 trillion in additional annual finance by 2030 to meet Paris Agreement goals, with approximately 60% needing to come from international public and private capital. Additionally, between $130 billion and $415 billion per year is required for adaptation and resilience.
• Green taxonomies can facilitate the transition of hard-to-abate sectors, such as cement and steel, by providing expert-developed binary criteria that reduce the complexity and reputational risk for investors who have previously been hesitant to allocate capital to heavy industry.
• A primary challenge for Global South taxonomies is the trade-off between interoperability (cross-border alignment) and usability (local applicability). Usability is often hindered by limited data availability and the complexity of 'Do No Significant Harm' (DNSH) criteria.
• To ensure credibility and attract international investment, taxonomies in the Global South should be science-based and interoperable. Examples include the ASEAN regional taxonomy, the Colombia Green Taxonomy, and the South African Green Finance Taxonomy.
• Taxonomies alone cannot steer capital; they must be part of a broader framework including policy measures, de-risking tools, currency hedging tools, and guarantees. In many jurisdictions, voluntary taxonomies representing market best practices are preferred over mandated regulations due to limited enforcement capacity and private sector pushback.
• Because climate adaptation and resilience are critically under-financed in the Global South, countries should adopt a phased approach: first developing mitigation taxonomies, then monitoring international developments, and finally using global guidance for resilience to avoid regional fragmentation.

APA

South African Institute of International Affairs (2024). Green Taxonomies in the Global South. https://saiia.org.za/research/green-taxonomies-in-the-global-south/

Chicago

South African Institute of International Affairs. Green Taxonomies in the Global South. 2024. https://saiia.org.za/research/green-taxonomies-in-the-global-south/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Green Taxonomies in the Global South |date=8 July 2024 |url=https://saiia.org.za/research/green-taxonomies-in-the-global-south/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2024green, author = {{South African Institute of International Affairs}}, title = {{Green Taxonomies in the Global South}}, institution = {South African Institute of International Affairs}, year = {2024}, month = jul, url = {https://saiia.org.za/research/green-taxonomies-in-the-global-south/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }