The Hong Kong Monetary Authority (HKMA) has unveiled Phase 2A of the Hong Kong Taxonomy for Sustainable Finance, significantly broadening its classification framework for sustainable economic activities to explicitly include climate transition and climate change adaptation categories alongside traditional green classifications.

The update builds on the Taxonomy launched in May 2024 and reflects a phased approach to defining what economic activities can be recognised as environmentally sustainable in the region’s financial markets. Under the revised framework, economic activities are now categorised as Green (aligned with 1.5 °C pathways and net-zero performance), Transition (carbon-intensive activities moving towards 1.5 °C alignment via time-bound decarbonisation), or Exclusion (activities that do not meet Green or Transition criteria).

A standout feature of Phase 2A is the introduction of a Climate Change Adaptation category, designed to recognise technologies, processes, materials, and practices that help enhance resilience and adaptation to climate impacts. The initial rollout uses a curated “whitelist” of eligible adaptation measures, with plans for more sophisticated criteria as local and global adaptation science evolves.

The update also expands sector coverage from four to six industries, adding Manufacturing and Information & Communications Technology, and increases the number of defined economic activities from 12 to 25 — including transmission and distribution of electricity, district heating/cooling, and low-carbon transport infrastructure.

According to the HKMA, Phase 2A incorporates public consultation feedback and reflects strong market support for expanded taxonomy coverage, transition elements, and adaptation criteria. Development of further taxonomy phases is already underway, with additional activities and sectors under consideration.