Singapore’s participation in the Multi-Jurisdiction Common Ground Taxonomy aims to streamline green financing across key global markets
SINGAPORE – At the COP29 climate summit in Baku, Azerbaijan, Singapore joined the European Union and China in launching an expanded green financing taxonomy, which will enhance the accessibility of green bonds and loans for issuers in Singapore, China, and the EU. This initiative, known as the Multi-Jurisdiction Common Ground Taxonomy (M-CGT), is a critical step toward improving the interoperability of green finance standards across the three major global markets.
The M-CGT, which now includes 110 economic activities spanning eight sectors, allows capital market participants to more easily determine which economic activities qualify for green financing. The taxonomy builds on previous efforts to harmonize the EU and China’s green finance criteria, which began with a bilateral Common Ground Taxonomy (CGT) in 2020. In 2022, this was expanded to include 72 activities across seven sectors.
The updated M-CGT offers cross-border investors a consistent set of criteria, addressing the fragmented landscape of green financing that has hindered international green capital flows in the past. While the M-CGT is not legally binding, green bonds and funds that align with its criteria will be recognized by investors across these jurisdictions, provided they comply with local laws and regulations.
This step is especially significant as financial institutions and investors have long called for greater consistency in green finance standards to reduce costs and mitigate risks like greenwashing. The M-CGT aims to provide a unified framework that makes green financing more accessible and effective, while also facilitating greater transparency in the definition of green economic activities.
The move is also expected to foster further interest from other countries, with Indonesia and Brazil already expressing interest in joining the M-CGT. Dr. Ma Jun, chairman of China’s Green Finance Committee, described the M-CGT as a “milestone,” emphasizing its potential to increase the interoperability of green finance standards across more markets. Singapore’s Monetary Authority (MAS) chief sustainability officer, Gillian Tan, echoed these sentiments, stressing that fewer, common standards will lead to lower costs and improved investor confidence.
The expansion of the taxonomy will also encourage more green capital flows globally, benefiting sustainable projects and businesses, and helping to drive the transition to a low-carbon economy.
