Phase II of Hong Kong’s Sustainable Finance Taxonomy and the Key Update

EcoVision
Nov 19, 2025
2 min read

Phase II of Hong Kong’s Sustainable Finance Taxonomy (also referred to as the Phase 2A stage) is the second development stage of the classification system led by the Hong Kong Monetary Authority (HKMA) with technical support from the Climate Bonds Initiative (CBI). It builds on the first phase released in May 2024 and was officially announced on 8 September 2025, accompanied by a public consultation.

Here’s a concise professional overview:

Purpose

Phase  II aims to expand and refine Hong Kong’s framework for identifying and classifying green and sustainable economic activities. The goal is to create a consistent, science‑based taxonomy aligned with international standards—such as the Paris Agreement, the EU‑China Common Ground Taxonomy (CGT), and the ISSB’s IFRS S1 & S2—while reflecting Hong Kong’s local circumstances.

Key Updates in Phase II (Stage 2A)

Expanded Sector Coverage:
- Adds manufacturing and information & communications technology (ICT) sectors to the four original industries (energy, transport, buildings, and waste), broadening applicability.
Increased Economic Activities:
- Expands from 12 to 25 defined green or sustainable activities, updating technical screening criteria for existing sectors.
Integration of Transition Activities:
- Introduces explicit standards for transition activities and transition measures, including phased decarbonization targets and clear timeframes for completing transition periods.
New Environmental Objective – Climate Adaptation:
- Adds climate‑change adaptation as an objective to better account for physical climate risks such as floods and extreme weather.
Enhanced Usability and Interoperability:
- Improves alignment with international frameworks and ensures practicality for financial institutions, corporates, and investors.

Significance

Supports hard‑to‑abate sectors by offering credible transition pathways.
Strengthens risk management through the inclusion of climate adaptation factors.
Builds investor confidence by ensuring transparency and comparability of sustainable finance activities.
Enhances regional cooperation between Hong Kong, Mainland China, and Asia, creating greater interoperability among sustainable finance frameworks.

In summary: Phase  II of Hong Kong’s Sustainable Finance Taxonomy marks a critical step toward a comprehensive, internationally aligned, and locally relevant classification system. It is designed to help the market direct capital toward credible low‑carbon and resilience‑enhancing investments, reinforcing Hong Kong’s position as a leading sustainable finance hub in Asia.