A new UNEP FI policy brief compares sustainable finance taxonomies across the five ASEAN Member States that have developed or implemented these classification systems of sustainable economic activities, finding increasing alignment with the regional ASEAN Taxonomy in key areas.

For countries and regions, determining what counts as a “green” economic activity towards climate and environmental commitments can be challenging without a defined set of activities or standardized method of classifying them. This complicates efforts to finance projects intended to advance the net-zero transition, meet biodiversity goals, or fulfill other environmental objectives—especially across borders, if different jurisdictions each define their sustainable economic activities and associated criteria differently. Around the world, almost 50 governments have been developing sustainable finance taxonomies that aim to address these challenges and unlock capital flows for domestic and international sustainable development, decarbonization, and climate adaptation and resilience.[1]

ASEAN developed its regional Taxonomy in November 2021, with the most recent update in December 2024, to provide a science-based, inclusive framework for classifying sustainable economic activities across the region.[2] The five ASEAN Member States (AMS) that have developed or implemented national taxonomies—Indonesia, Malaysia, Philippines, Singapore, and Thailand—have done so over a similar period, with Malaysia’s the earliest in April 2021 and Thailand’s the most recent publication consultation on its Phase 2 draft, which concluded in January 2025.

The policy brief, “Sustainable Finance Taxonomies in ASEAN: Towards Regional Harmonization”, provides an overview of the major components of the ASEAN Taxonomy and considers the structure of each current AMS national taxonomy and its alignment with ASEAN Taxonomy elements, using detailed matrices. These include incorporation of the ASEAN Taxonomy’s environmental objectives; recommended approaches for assessing substantial contribution to these objectives; sector prioritization; and adherence to the criteria of “Do No Significant Harm”, Remedial Measures to Transition, and Social Aspects.

Among other findings, the analysis shows that:

  • Taxonomies share the objectives of climate change mitigation and adaptation, while some also list other priorities important for their respective national priorities, such as biodiversity protection, circular economy, and marine resource management.
  • Currently, Malaysia and the Philippines have adopted principles-based assessments, while Singapore and Thailand focus on technical screening criteria (TSC). Indonesia has incorporated both principles- and TSC-based assessments.
  • There appears to be significant overlap in sector coverage among the national taxonomies despite different levels of progress in developing sector-specific criteria. As these taxonomies continue to develop and expand criteria to more sectors, they are gradually showing greater alignment with the ASEAN Taxonomy.
Table from the policy brief showing how the regional ASEAN Taxonomy and the Member States’ taxonomies address environmental objectives (EOs) and assessment approaches.

“Across ASEAN, we see important work underway to catalyze sustainable finance. The ASEAN Member States’ sustainable finance taxonomies and the regional ASEAN Taxonomy provide valuable tools for governments and the financial industry to assess economic activities in terms of their contributions to environmental objectives and the net-zero transition. It is encouraging to see an increasing harmonization of these taxonomies as they maintain their alignment with their national climate and environmental priorities.”

– Laura Canas da Costa, Global Policy Co-Lead, UNEP FI

ASEAN is poised to become a key player in shaping global sustainable finance standards. Its Member States’ taxonomies are anticipated to continue to evolve with regular updates to align with scientific advancements; transparency, such as public disclosure of eligibility criteria; and regional collaboration.

Of the five AMS that have not yet developed or implemented taxonomies, lessons from early adopters could accelerate their progress. For instance, Indonesia’s dual approach (principles + TSC) offers a model for balancing comprehensiveness and practicality, while Singapore’s participation in the Multi-jurisdiction Common Ground Taxonomy demonstrates its effort to promote cross-border interoperability.

For the financial industry, consistent and interoperable taxonomies help mitigate risks linked to greenwashing and fragmented criteria, which in turn enhances investor confidence and unlocking capital flows into sustainable investments.[3] As other ASEAN countries develop or adopt domestic taxonomies, their efforts can continue to move the regional market towards greater cohesion and harmonization, driving the transition towards a sustainable, inclusive, and resilient economy.

Han Wang, who recently completed her internship with the UNEP FI Policy Team, is a co-author of the policy brief.

 

[1] World Bank, “Taxonomy astronomy: The global search to define sustainable finance“, July 2024

[2] ASEAN Taxonomy Board, “ASEAN Taxonomy for Sustainable Finance Version 3“, December 2024

[3] OECD, Mobilising ASEAN Capital Markets for Sustainable Growth, 2 May 2024