For an economic activity to be considered environmentally sustainable under the ASEAN Taxonomy, it must contribute substantially to at least one of the six environmental objectives.
ASEAN Taxonomy: The ASEAN Taxonomy for Sustainable Finance provides a classification system to determine which activities can be considered environmentally sustainable.
Environmental Objectives: These six environmental objectives typically include areas such as climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.
Contribution Requirement: An activity must make a significant contribution to at least one of these objectives to be classified as sustainable. This ensures that the activity aligns with broader environmental goals and promotes sustainability across the region.
CFA ESG Investing References:
The CFA Institute’s materials on sustainable finance frameworks highlight the importance of substantial contributions to specific environmental objectives to classify an activity as sustainable. This approach ensures clarity and consistency in sustainable finance across different regions.
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