Taxonomy Phase 2B adds 10 mitigation sectors and adaptation framework
Hong Kong's sustainable finance taxonomy has expanded with the release of the Phase 2B prototype for public consultation. The Hong Kong Monetary Authority added 10 mitigation activities in manufacturing and transport alongside a five-step framework for climate adaptation projects.
Batteries, steel and alternative fuels
On climate change mitigation, Phase 2B incorporates 10 new economic activities across manufacturing, transportation, and waste management.
It introduces enabling technologies such as battery manufacturing, battery recycling, and the production of semiconductors, motors, and transformers.
For hard-to-abate industries, the technical criteria for iron and steel establish two compliance pathways: one based on emissions intensity and another on technological improvement.
In transportation, the framework covers the purchase and operation of electric buses, minibuses, and taxis.
It also encompasses the full value chain for sustainable aviation fuels alongside green marine fuels such as methanol and ammonia.
A five-step test for climate resilience
To address adaptation finance and avoid maladaptation, the HKMA introduced a five-step process-based approach covering project scoping, risk identification, measure design, ongoing monitoring, and enhancement.
Adaptation measures are divided into 11 whitelist activities eligible for direct classification and 13 non-whitelist measures requiring case-specific assessment, focused initially on shoreline protection and flood management.
The HKMA is gathering feedback during public consultation to assess whether to embed the taxonomy into banking supervision.
Dual-track realism meets greenwashing risks
The dual pathways for steel offer realistic benchmarks without diluting decarbonisation standards.
Setting explicit metrics for adaptation projects directly targets greenwashing in resilience funding.
The HKMA must now clarify whether these voluntary criteria will become binding supervisory rules.