EC Provides Update on IPSF Common Ground Taxonomy
The European Commission notified that the International Platform on Sustainable Finance (IPSF) has updated the Common Ground Taxonomy (CGT) instruction report and CGT activities’ table, along with the related frequently asked questions (FAQs). The table of activities has been updated with additional activities contributing to climate change mitigation.
In November 2021, IPSF launched a call for feedback to consult stakeholders on the CGT instruction report and activities’ table. The consultation ran from November 04, 2021 to January 14, 2022. EC has also released summary of feedback received on the consultation. In light of the feedback received and further assessments, the CGT instruction report and table of activities has been updated. The updated version of the CGT covers 72 climate change mitigation activities that share common ground for both the European Union and China taxonomies, with regard to the “substantial contribution” criteria. The updated version of CGT only covers climate change mitigation objective while the other environmental objectives will be progressively covered in the future.
The CGT is based on the activities included in both the adopted European Union taxonomy for sustainable activities and the China green finance taxonomy. It follows a systematic methodology that maps common activities and then compares the technical criteria defining when these activities make a substantial contribution to climate change mitigation. The work at the initial stage involved extraction of climate change mitigation activities from the China green bond taxonomy and the EU Taxonomy, mapping of all economic activities in both taxonomies to facilitate comparison, and selection of priority sectors that would significantly contribute to the carbon emission reduction or sequestration. The International Standard Industrial Classification of All Economic Activities (ISIC) was used as the international reference classification.
Related Links
Keywords: Europe, Asia Pacific, EU, China, Banking, Insurance, Securities, Climate Change Risk, ESG, Sustainable Finance, Common Ground Taxonomy, FAQ, Taxonomy, Green Finance, IPSF, EC
Featured Experts
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Hasan Cerhozi
Hasan leads Moody’s Analytics ESG methodology development. He is expert on carbon transition, nature related risks and is a guest lecturer at ESSEC Business school on sustainable finance.
Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Previous Article
EBA Publishes Phase 2 of Reporting Framework 3.2Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.