On 30 November 2023, the ASEAN Taxonomy Board (“ATB“), representing ASEAN finance sectoral bodies, announced the completion of targeted stakeholder consultation exercises for Version 2 of the ASEAN Taxonomy for Sustainable Finance (“ASEAN Taxonomy“).
The ASEAN Taxonomy was released by ATB on 27 March 2023. It features the completed Foundation Framework that offers detailed methodologies for assessing various economic activities. Further, it provides Technical Screening Criteria (“TSC“) for the first focus sector (Energy, encompassing Electricity, Gas, Steam and Air Conditioning Supply) and the first enabling sector (Carbon Capture, Utilisation and Storage). Please refer to our Legal Update titled “ASEAN Taxonomy V2: Enabling a Just Transition Towards Sustainable Finance Adoption by ASEAN” for more information.
Following the release of the ASEAN Taxonomy, ATB conducted targeted consultation exercises with key stakeholders within the ASEAN region and beyond through written feedback, roundtable sessions, and interviews.
ATB highlighted that the stakeholders:
(a) affirmed the ASEAN Taxonomy’s use of a traffic light-based system as a helpful tool in supporting companies in their transition finance journey;
(b) welcomed the ASEAN Taxonomy’s inclusive approach in accommodating companies at various stages of development with the sector-agnostic principles-based Foundation Framework and threshold-based Plus Standard;
(c) welcomed the ASEAN Taxonomy as a credible, science-based tool and its emphasis on interoperability, in particular, the alignment of the Plus Standard’s Green Tier with the EU Taxonomy; and
(d) commended the inclusion of coal phase-out as an activity in the Plus Standard as a powerful tool for transition.
Most of the feedback received pertained to suggestions to improve the clarity of definitions and the usability of the ASEAN Taxonomy. ATB stated that the more immediate points of clarification will be incorporated into the next version of the ASEAN Taxonomy that will be effective in Q1 2024. Other improvements will be rolled out with the release of future versions of the ASEAN Taxonomy.
ATB is currently developing the TSC for the next two focus sectors, namely Transportation & Storage and Construction & Real Estate. The TSCs for the remaining focus sectors and enabling sectors will be rolled out over the next two years.
ATB has stated that stakeholders will continue to be engaged throughout the process of developing and enhancing future versions of the ASEAN Taxonomy. ATB will continue working towards achieving the mandate of developing, maintaining, and promoting the ASEAN Taxonomy in order to direct capital towards a more sustainable and resilient future.
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