Sustainable finance
Sustainability Taxonomy
Definition
A sustainability taxonomy is a classification system that defines, through technical criteria, which economic activities qualify as environmentally (or socially) sustainable for investment and disclosure purposes. The EU Taxonomy Regulation (2020/852) is the reference model: activities qualify by substantially contributing to one of six environmental objectives, doing no significant harm to the others, and meeting minimum safeguards. Dozens of jurisdictions have developed or are developing national taxonomies (China, ASEAN, UK, South Africa), with interoperability an active challenge.
References
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This reference provides supporting context for how “Sustainability Taxonomy” is defined and used.
Overview
How it is used
Taxonomies structure fund labelling (SFDR Article 8/9 alignment), green bond eligibility, bank portfolio steering and corporate capex reporting.
Why it matters
A taxonomy is the dictionary that sustainable finance actually trades on; whoever writes the criteria writes the market.