Multi-Jurisdiction Common Ground Taxonomy Released to Improve Interoperability of Sustainable Finance Taxonomies across China, the EU and Singapore

The Multi-Jurisdiction Common Ground Taxonomy (“M-CGT“) was presented on 14 November 2024, being a collaborative effort by the Monetary Authority of Singapore (“MAS“), the People’s Bank of China (“PBoC“), and the European Union Directorate-General for Financial Stability, Financial Services and Capital Markets Union. The M-CGT enhances the interoperability and comparability across jurisdictional taxonomies to facilitate more cross-border green investments.

The initiative on M-CGT originated from the International Platform on Sustainable Finance (“IPSF“), a multinational forum for dialogue between policymakers to drive private capital towards sustainable investments, and was initially mentioned during the establishment of the China-Singapore Green Finance Taskforce in April 2023 (refer to our May 2023 Legal Update here for more details).

The M-CGT builds on the EU-China Common Ground Taxonomy (“CGT“), which aimed to enhance the interoperability of the EU Sustainable Finance Taxonomy and the PBoC’s Green Bond Endorsed Project Catalogue. The EU-China CGT was first released in November 2021 and subsequently updated in June 2022. With the M-CGT, the bilateral EU-China CGT has been expanded to include the Singapore-Asia Taxonomy (“SAT“), highlighting the commonalities and differences across the three taxonomies focusing on activities contributing to climate change mitigation.

Key Aspects of M-CGT

The key aspects of the M-CGT are as follows:

  • It serves as a technical reference document for various market participants (including financial institutions, corporates, investors and external reviewers), allowing them to identify what qualifies as green across the three jurisdictions based on the following covered in the M-CGT: activities, environmental objectives, and criteria (e.g. thresholds).

  • Although not legally binding, green bonds and funds that align with the M-CGT criteria can be considered by cross-border investors whose markets reference the taxonomies mapped to the M-CGT, subject to applicable laws and regulations of each jurisdiction.

  • It increases interoperability by serving as a reference point for jurisdictions that are developing their domestic green taxonomies. The M-CGT is designed to accommodate the comparison of more jurisdictional taxonomies in the future.

Methodology for Interoperability

  • A total of 110 activities across eight focus sectors and their corresponding substantial contribution criteria in meeting the objective of climate change mitigation were mapped and identified for their eligibility for the M-CGT.

  • Scenarios of overlap (among the taxonomies) are assigned for each activity based on the extent of commonalities found between these activities within the EU, China, and SG taxonomies.

    • For activities with the same or interoperable metrics (e.g. activities in the energy sector where life-cycle GHG emissions is a common metric), the level of stringency of the taxonomies’ criteria was assessed.

    • For activities with different metrics (e.g. activities which rely on local certification schemes, standards or regulations), commonalities in the requirements of the taxonomies’ criteria were identified.

Findings on Commonalities

The mapping exercise found that there is some degree of comparability of green activities across taxonomies of the three jurisdictions. Investors and financial institutions across China, the EU and Singapore can consider green finance instruments that reference the M-CGT, subject to the applicable laws and regulations of each jurisdiction.

  • Clear definitions with the most stringent criteria were found in approximately 60% of common activities, mainly across the manufacturing, transportation, water and waste sectors.

  • Criteria alignment across taxonomies was found in 5% of the common activities, mainly in the electricity generation and construction sectors.

  • Indirect comparability in criteria was found for approximately 33% of common activities, mainly in the construction and agriculture and forestry sectors where local regulations, standards or certifications are usually referenced.

For details, please refer here as well as MAS’ media release on “The International Platform on Sustainable Finance presents the Multi-Jurisdiction Common Ground Taxonomy to enhance interoperability of taxonomies across EU, China and Singapore“.


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