Building a World Top Green and Sustainable Bond Hub

31 A Roadmap for Hong Kong as a Green and Sustainable Bond Hub Challenge Near-term action Mid- to long-term plan Insufficient infrastructure Improve infrastructure for offshore Renminbi green bond issuance and listing. Utilize technology to advance the efficiency and transparency for issuing international sustainable bond while reducing the cost. Improve the usability of the green exchange platform for project investment. 4.1 Action 1: Utilize the CGT to Come Up with a Hong Kong-labelled Framework Providing Guidance Regarding Harmonizing Taxonomies In response to the fragmentation within green taxonomies, researchers are looking for flexible and interoperable solutions to allow international issuers and investors to compare green taxonomies across jurisdictions. The ongoing work of the International Platform on Sustainable Finance (IPSF) is a key milestone in this regard. In July 2020, the IPSF set up the Taxonomy Working Group to undertake a detailed and comprehensive comparison of China’s Green Bonds Endorsed Projects Catalog (2021 Edition) and the EU Taxonomy Climate Delegated Acts to draw up the 1 st edition of Common Ground Taxonomy (CGT) . The CGT analyzed methodology as well as China’s and the EU’s classification of green finance, including legal basis, objectives, principles, framework, logic, indicators, presentation forms, and so on. A set of green classification standards recognized by both parties has been established. In detail, the CGT aims to mitigate climate change and contains seven sections following the International Standard Industrial Classification of All Economic Activities , including: (1) Agriculture, forestry and logging; (2) Manufacturing; (3) Electricity, gas, steam and air conditioning supply; (4) Water supply, sewerage, waste management, and remediation activities; (5) Construction; (6) Transportation and storage; (7) Others. It has categorized 72 economic activities that make a significant contribution to climate change mitigation jointly recognized by China and the EU. The CGT is of great significance in promoting China-EU green investment and financing cooperation and the development of cross-border business. It has applied scenario analysis according to the overlapped areas (Figure 17). • Scenario 1: Areas with clear overlaps . Some activities in the two taxonomies assessed have overlapped. They required minimal further analysis, and electricity generation from wind power and oceanic power is the only area that required further analysis. • Scenario 2: The EU’s criteria are more stringent and/ or detailed . In this case, the EU’s criteria were described in the CGT in more detail.