Building a World Top Green and Sustainable Bond Hub

Scenario 1 Scenario 2 Scenario 4 Scenario 5 Clear overlap Common activity is the same across both Common activity is to use EU definition/ criteria Common activity is to use China definition/ criteria Common activity is to use both criteria where possible or excluded if technically difficult Excluded EU activity China activity EU activity China activity Scenario 3 EU activity China activity China activity EU activity 32 Hong Kong’s Transition Towards a Green and Sustainable Finance Center: Building a World Top Green and Sustainable Bond Hub • Scenario 3: China’s criteria are more stringent and/ or detailed . In this case, the China’s criteria were described in the CGT in more detail, and all scenario 3 activities were included in the CGT. • Scenario 4: Identifiable overlap . This scenario was assigned to activities that are not clear in either China’s or the EU’s criteria. As a result, both the EU’s and China’s criteria were described. • Scenario 5/6: Unclear overlap or obvious divergence. These scenarios were assigned to activities that were very difficult to map or there was obvious differentiation. Scenario 5 was assigned to activities that were very difficult to map in the other taxonomy, for example, the EU includes criteria for landfills but the China taxonomy does not include landfills. Scenario 6 was assigned to activities where there was obvious differentiation. Both Scenario 5 and 6 activities were excluded from the CGT. To align with the CGT document, Scenario 6 is not displayed in Figure 17. Figure 17: CGT Scenario Analysis (Source: IPSF Taxonomy Working Group) In May 2024, the HKMA published the Hong Kong Taxonomy for Sustainable Finance which makes Hong Kong the first market to operationalize the CGT. The Taxonomy is designed to be interoperable and aligned with other major taxonomies, facilitating international cooperation and investment. Having the Hong Kong Taxonomy is critical to strengthening the city’s position as a hub and contributing positively to the growing need for interoperability among standards within the green finance space.