The Hong Kong Monetary Authority (HKMA) has released a draft update to its Sustainable Finance Taxonomy, proposing:

· Inclusion of Transition Activities: Expanding beyond green categories to cover carbon-intensive sectors (e.g., energy, manufacturing) on a “time-bound decarbonization journey” toward net zero by 2050. Sunset dates for activities vary by sector—2030 for Maritime, 2035 for Energy.

· Expansion to New Sectors and Categories: The proposed Phase 2A adds manufacturing, ICT, and 13 new activity categories, including electricity transmission/distribution, district heating/cooling, and low-carbon transport infrastructure.

· Climate Adaptation Objective: Taxonomy scope will now also address climate change adaptation, aiming to direct funding toward managing physical risks and extreme weather events.

· Future Phases: HKMA plans further expansions, potentially including Carbon Capture, Utilization & Storage, additional activities in covered sectors, and consideration of “Do No Significant Harm” principles.

· Consultation Open: The public consultation for Phase 2A will remain open until October 8, 2025.

The update aims to mobilize capital toward sustainable and transition activities while balancing environmental imperatives with economic growth.

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