On 15 February 2023, the Green Finance Industry Taskforce ("GFIT") issued the third consultation paper ("2023 Consultation Paper") on the taxonomy it has been developing for Singapore-based financial institutions (FIs) ("Singapore Taxonomy") to identify and classify green and transition activities.
The 2023 Consultation Paper follows two earlier consultation papers issued in 2021 and 2022.
The key proposals in the 2023 Consultation Paper include: (i) the thresholds and technical screening criteria to classify economic activities as green, amber or red categories under the traffic light approach for five sectors; and (ii) the Do No Significant Harm ("DNSH") criteria.
Thresholds and Technical Screening Criteria for Activities in Five Sectors
The Singapore Taxonomy covers activities in eight focus sectors, namely: (i) Energy; (ii) Transport; (iii) Building; (iv) Industry; (v) Information and Communications Technology ("ICT"); (vi) Waste and Water; (vii) Agriculture and Forestry; and (viii) Carbon Capture and Storage/Sequestration ("CCS").
The 2022 Consultation Paper consulted on the thresholds and technical screening criteria for activities in the first three sectors: (i) Energy, (ii) Transport and (iii) Building.
In the 2023 Consultation Paper, GFIT sets out the proposed thresholds and technical screening criteria to classify economic activities under either green, amber or red categories for the other five focus sectors: (i) Industry; (ii) ICT; (iii) Waste and Water; (iv) Agriculture and Forestry; and (v) CCS.
Do No Significant Harm (DNSH) Criteria
GFIT proposed a DNSH assessment based on a set of DNSH criteria to ensure that when an activity makes a substantial contribution to climate change mitigation, the activity does not cause significant harm to all the other environmental objectives of the Singapore Taxonomy (i.e. climate change adaptation; protection of healthy ecosystems and biodiversity; promotion of resource resilience and circular economy; and pollution prevention and control).
The details of the DNSH criteria are contained in the document "Proposed DNSH Criteria" (15 February 2023). GFIT indicated that the application of the DNSH criteria has not been decided at this stage.
The consultation period for the 2023 Consultation Period ran from 15 February 2023 to 15 March 2023. GFIT intends to issue the final taxonomy by the first half of 2023.
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