Phase 2B green taxonomy expands to heavy industry and adaptation
The Hong Kong Monetary Authority has published its Phase 2B taxonomy prototype for consultation, expanding coverage to hard-to-abate sectors and climate resilience measures. Acting Chief Executive Arthur Yuen announced the framework at the GBA Green Finance Alliance Annual Forum.
Financing enablers and hard cases
The Phase 2B Taxonomy prototype adds economic activities critical to regional decarbonisation and climate adaptation.
On transition, the framework incorporates manufacturing and recycling of batteries alongside low-carbon technology production.
It also covers hard-to-abate sectors, specifically air transport plus iron and steel.
“A taxonomy that finances only what is already green will not get Asia to net zero; it must finance the enablers and the hard cases alike,” Arthur Yuen stated.
For resilience, the prototype introduces adaptation criteria targeting shoreline protection and flood management through a process-based evaluation mechanism.
This release follows Phase 1 in May 2024 and Phase 2A in January 2026.
Two million assets on the radar
Beyond taxonomy definitions, the HKMA is developing transition planning guidelines for banks to manage climate-related balance sheet risks.
These guidelines center on corporate client engagement across Asia, where emissions account for over 60 percent of the global total.
In parallel, the cloud-based Physical Risk Assessment Platform launched in 2024 has evaluated approximately 2 million assets to date, after its analytical coverage was expanded earlier this year from Hong Kong to a global scope.
Progress on paper, friction in practice
Broadening definitions to heavy industry targets the true bottleneck in Asian transition finance.
Yet voluntary prototypes cannot replace binding corporate disclosure across fragmented legal regimes.
Without mandatory regional standards, cross-border capital will remain cautious.