Creating a common language

Taxonomies are structured frameworks that that allow assessment of whether certain economic activities (usually assets, projects, facilities or measures) meet prescribed sustainability standards and align with policy commitments.  

Why it matters

• Clarity & consistency: Helps investors and regulators understand what qualifies as sustainable.
• Policy support: Aligns financial flows with national and global sustainability goals.
• Credibility: Technical criteria ensure that sustainability claims are measurable and verifiable.

Key features

Typically includes a list of economic activities and are considered to align with specific social or environmental goals, with technical criteria to assess alignment.  

Example

The EU Taxonomy identifies economic activities that can be considered environmentally sustainable. The SFDR requires certain funds to disclose alignment with the EU Taxonomy.

RIAA Certification example

While the RI Certification Standard is not itself a taxonomy, nor does it explicitly reference taxonomies, guidance notes on specific areas outline how a taxonomy may be used by a product provider to adhere to the Standard.

For example, to meet the product labelling requirements of the RI Certification Standard, the Product Labelling Guidance Note provides that climate-related claims of a product should not contradict any other claims or practices of the product and that any perceived contradictions should be clearly explained. As part of this explanation a product provider may use “a clear definition of what qualifies as a climate solution, for example, through the use of a particular taxonomy…”.

Read more about RIAA Certification.

Examples of other frameworks  

Australian Sustainable Finance Taxonomy; NZ Sustainable Finance Taxonomy (under development); Hong Kong Taxonomy for Sustainable Finance, Singapore-Asia Taxonomy for Sustainable Finance

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