New version of ASEAN taxonomy hoped to help with coal phase-out
The Association of Southeast Asian Nations (ASEAN) has recently launched the second version of its taxonomy for sustainable finance, expected to help the region unlock financing for coal phase-outs.
Jakarta (VNA) – The Association of Southeast AsianNations (ASEAN) has recently launched the second version of its taxonomy forsustainable finance, expected to help the region unlock financing for coalphase-outs.
In November 2021, the bloc rolled out the first version ofthe ASEAN Taxonomy, which aims to guide capital toward sustainable activities inthe region. The ASEAN financial bodies then revamped the framework with thesecond version, whose updates put a strong emphasis on the phasing out ofcoal-powered plants.
ASEAN claims that the coal phase-out criteria laid out in theframework are the global first for a regional taxonomy.
The ASEAN Taxonomy’s second version has accommodated theneeds for energy transition for countries like Indonesia, which is not only buildingnew and renewable energy but also working on retiring coal-powered plants,Indonesian Finance Minister Sri Mulyani told a hybrid press conference on ASEAN’stransition finance held on March 30 on the sidelines of the ASEAN FinanceMinisters’ and Central Bank Governors’ Meeting in Bali.
The taxonomy adoptsa colour-coded system (green, amber, and red) based on the contribution or lackthereof an economic activity makes to the environmental objectives of thetaxonomy. The environmental objectives include climate change mitigation andadaptation, biodiversity protection, resource resilience, and circular economytransition.
As the colours suggest, green indicates economic activitiesthat support the taxonomy’s environmental objectives. Activity will beclassified as amber if it meets green classification but may cause harm toother objectives although they already must have remedial measures. Redactivities are economic activities that fail to meet environmental objectives.
According tothe second version of the ASEAN Taxonomy, coal phase-outs may be classified asgreen or amber activities.
These classification will provide certainty for the financialinstitutions to look at projects that can be considered for financing, MinisterSri Mulyani said./.
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Illustrative image (Photo: VNA) 
