The Our Hong Kong Foundation has expressed strong support for the Hong Kong Monetary Authority's recent public consultation on the Phase 2B prototype of the Hong Kong Sustainable Finance Classification Taxonomy. Shui Chi Wai, the foundation's Vice President and Executive Director of the Public Policy Institute, noted that this next phase represents a significant step forward in refining the city's sustainable finance infrastructure.

The updated framework is expected to broaden its coverage to include 39 economic activities, marking the first time "enabling technologies" that support carbon reduction will be incorporated. The taxonomy also introduces transition pathways for hard-to-abate sectors such as aviation and steel, which face considerable challenges in decarbonisation efforts. These enhancements are designed to help businesses and financial institutions develop more robust financing frameworks, boost the market credibility of projects, and ultimately attract greater capital flows to support green development and low-carbon transitions across the region.

Shui emphasised that the true value of the classification system lies in its ability to provide clear direction—showing companies how to pivot towards sustainability and guiding banks on how to assess credible transition plans. This clarity, in turn, ensures that capital is directed towards projects with tangible, measurable outcomes rather than simply chasing labels or intentions.

As the taxonomy continues to mature, the next critical step is to strengthen its practical application in the market. Shui recommended the development of pilot financing projects with distinctive Hong Kong characteristics that balance carbon reduction goals with climate resilience priorities. Initial focus areas could include low-carbon transportation and sustainable aviation fuels, where demand is clear and impact can be readily quantified. Such initiatives would foster collaboration between financial institutions, project developers, and professional service providers, establishing replicable case studies for financing structures and performance evaluation that other market participants can reference.

Drawing on lessons from the European Union, Shui also suggested that major banks and large corporations should be encouraged to disclose the value and proportion of their taxonomy-aligned financing or investments using a standardised reporting format. Over time, this could evolve into periodic publication of aggregated market data, clearly delineating capital allocated across green, transition, and climate adaptation projects. By fostering public transparency through accessible data, the market would gain better visibility into investment progress and funding needs across relevant industries, enabling more efficient capital allocation and informed decision-making across the financial ecosystem.