STRENGTHEN ASEAN FINANCIAL COOPERATION TO PROMOTE REGIONAL SUSTAINABLE FINANCE
On December 2nd and 3rd, 2024, the State Securities Commission (SSC) coordinated with the ASEAN Classification Board (ATB), the ASEAN Capital Market Forum (ACMF) and the Asian Development Bank (ADB) co-organized the ASEAN Sustainable Finance Taxonomy (ASEAN Taxonomy) conference in Hanoi. This is an activity within the framework of ASEAN financial cooperation to promote sustainable finance in the region.
ASEAN Taxonomy is a guide developed to facilitate a just energy transition towards sustainable finance adoption by ASEAN member countries. ASEAN Taxonomy is built based on 5 principles and provides 2 assessment approaches to be suitable for application to many different subjects. ASEAN Taxonomy identifies 6 Focus Sectors and 3 Enabling Sectors that are considered particularly important in ASEAN's sustainable development journey, of which 6 Focus Sectors include (1) Agriculture, forestry and fishery, ( 2) Supply of electricity, gas, steam, air conditioning, (3) Manufacturing, (4) Transportation and logistics, (5) Water supply and wastewater treatment, (6) Construction and real estate; 3 Enabling Sectors include (1) Information and communications, (2) Professional services, science and technology, (3) Carbon capture, storage and processing.
The ASEAN Taxonomy is based on four Environmental Objectives (EOs): EO1 requires activities to be aligned with decarbonization pathways under the Paris Agreement. EO2 focuses on mitigating the negative impacts of climate change and increasing resilience through the implementation of processes or actions. EO3 focuses on protecting natural ecosystems and biodiversity, promoting sustainable use of natural resources, and minimizing negative impacts on the environment. EO4 focuses on promoting resource resilience and the transition to a circular economy through principles such as minimizing resource use, optimizing resource productivity, and closing resource loops through effective waste management. To be classified under the ASEAN Taxonomy, any activity must demonstrate that it contributes to at least one of these EOs and does not cause any negative impacts on the other EOs. The ASEAN Taxonomy requires any activity to meet 3 Essential Criteria (EC) for classification: Do No Significant Harm (DNSH), Remedial Measures to Transition (RMT) and Social Aspects (SA). DNSH ensures that an Activity contributing to one EO does not cause significant harm to other EOs. RMT ensures that any significant harm is eliminated or rendered negligible. SA focuses on social aspects that may be harmed by an Activity, such as human rights, labor rights and impacts on people living near investments.
In the opening remarks, Ms. Lyn Javier, Assistant Governor (Policy and Specialized Supervision Sub-Sector), Bangko Ng Sentral Pilipians and Vice Chair, ASEAN Taxonomy Board, highlighted the vision of the ASEAN Classification as a classification system for environmentally sustainable economic activities, developed as a common language for sustainable finance in the ASEAN region. With the participation of speakers from the financial sector and over 100 guests, including representatives from ministries, agencies, organizations, and associations, the workshop provided attendees with an overview of how the financial industry and State regulatory agencies can contribute to the development of the National Sustainable Finance Taxonomy as well as its effective use.
The ASEAN Sustainable Finance Taxonomy Workshop is an important activity within the framework of the ASEAN Capital Market Forum (ACMF) to raise awareness and understanding, as well as share experiences in applying ASEAN Taxonomy in ASEAN member countries. The workshop also contributes to promoting the development of Vietnam's Sustainable Finance Taxonomy in the coming time, while actively contributing to the ASEAN financial cooperation process./.
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