Circular landing: 20260122-7-EN

This document summarizes the Hong Kong Monetary Authority (HKMA) Circular dated 22 January 2026, detailing the publication of the Hong Kong Taxonomy for Sustainable Finance (Phase 2A). This circular marks a significant advancement in Hong Kong's efforts to promote sustainable finance and support the region's transition towards a low-carbon economy.

The circular announces the official publication of the Hong Kong Taxonomy for Sustainable Finance (Phase 2A) by the HKMA. This Taxonomy serves as a standardized framework for classifying economic activities that contribute to green and sustainable development. Its primary purpose is to provide a clear and consistent basis for identifying and assessing sustainable investments, thereby facilitating the flow of capital towards environmentally and socially responsible projects and assets. This publication follows the initial release of Phase 1 in May 2024 and a subsequent public consultation on the Phase 2A Prototype, which commenced on 8 September 2025. The HKMA has incorporated feedback from this consultation into the final Phase 2A version of the Taxonomy.

The core of this circular is the introduction of the Hong Kong Taxonomy for Sustainable Finance (Phase 2A). This phase represents an expansion and refinement of the sustainable finance framework, building upon the foundation laid by Phase 1. The HKMA emphasizes that the Taxonomy is a "living document," meaning it is designed to evolve over time to reflect market developments, evolving government policies, industry priorities, technological advancements, and continuous stakeholder engagement.

The HKMA actively encourages authorised institutions (AIs) to adopt and utilize the Hong Kong Taxonomy across various applications. These applications include, but are not limited to:

• Product Labelling: Ensuring transparency and consistency in how sustainable financial products are labelled.
• Product Development: Guiding the creation of new financial products that align with sustainable objectives.
• Identification: Systematically identifying economic activities and assets that meet sustainability criteria.
• Disclosures: Enhancing the quality and comparability of sustainability-related disclosures made by financial institutions and their clients.
• Risk Management: Incorporating sustainability considerations into existing risk management frameworks, such as credit risk and investment risk.
• Investment Guidance: Providing a reliable basis for investors to make informed decisions regarding sustainable investments.

Phase 2A of the Taxonomy specifically aims to broaden its coverage and introduce relevant enhancements, drawing directly from the feedback received during the public consultation period. The HKMA has also released a Consultation Report alongside the Taxonomy, which details the feedback received from stakeholders and outlines the HKMA's responses and considerations. This report is crucial for understanding the rationale behind the finalized Phase 2A content.

The publication of Hong Kong Taxonomy for Sustainable Finance (Phase 2A) represents a significant advancement. The key changes and updates introduced in this phase include:

• Expanded Taxonomy Coverage: Phase 2A builds upon Phase 1 by incorporating a wider range of economic activities that contribute to sustainable development. While specific details of the expanded coverage are not elaborated upon in the circular itself, it is implied that more sectors or sub-sectors have been brought under the Taxonomy's purview.
• Refined Classification Criteria: Based on public consultation feedback, the criteria for classifying economic activities as "green" or "sustainable" have been refined. This suggests a move towards more precise definitions and robust thresholds to ensure the integrity of the Taxonomy.
• Incorporation of Stakeholder Feedback: A core element of Phase 2A's development was the public consultation process. The HKMA has demonstrably integrated this feedback, leading to a more market-relevant and practical Taxonomy. The accompanying Consultation Report provides specific details on how feedback influenced the final output.
• Enhanced Focus on Transition Activities: While not explicitly detailed in this circular, the mention of "transition attributes" alongside "greenness" suggests a growing emphasis on activities that support the transition to a low-carbon economy, even if they are not immediately "green." This is a crucial aspect of enabling broad-based decarbonization efforts.
• Establishment of a "Living Document" Framework: The explicit statement that the Taxonomy is a "living document" signals a commitment to ongoing updates and adaptations. This acknowledges the dynamic nature of sustainable finance and the need for continuous improvement.
• Formal Publication of Phase 2A: This circular marks the official launch of Phase 2A, making it available for adoption by the market. This elevates the Taxonomy from a prototype to an official standard.

• 22 January 2026: The date of this HKMA Circular, marking the official publication of the Hong Kong Taxonomy for Sustainable Finance (Phase 2A). This is also the date the Taxonomy was made available.
• May 2024: Release date of Phase 1 of the Hong Kong Taxonomy for Sustainable Finance.
• 8 September 2025: Commencement date of the public consultation on the Phase 2A Prototype of the Hong Kong Taxonomy.
• Ongoing: Development of subsequent phases of the Hong Kong Taxonomy is underway and will continue to be informed by market developments, government policies, industry priorities, technological advancements, and ongoing stakeholder engagement.

• Applicable Parties: All Authorised Institutions (AIs) in Hong Kong are the primary recipients of this circular and are encouraged to adopt the Taxonomy. This includes banks, deposit-taking companies, and other financial institutions licensed by the HKMA.
• Affected Institutions: Beyond AIs, other market participants, including asset managers, investment firms, issuers, and corporations seeking sustainable finance, will be indirectly affected as the Taxonomy becomes a de facto standard for assessing sustainability.
• Degree of Impact: The impact is expected to be significant, particularly for AIs. They are encouraged to integrate the Taxonomy into their strategic planning, product development, risk management, and disclosure processes. While not mandated at this stage, the HKMA's encouragement suggests a strong expectation of adoption. Over time, a widespread adoption of the Taxonomy is likely to standardize practices and improve the transparency and credibility of sustainable finance in Hong Kong.

While the circular encourages the use of the Hong Kong Taxonomy, it does not explicitly state mandatory compliance requirements or reporting obligations *at this stage*. However, the HKMA's emphasis on adoption implies the following:

• Voluntary Adoption: AIs are encouraged to voluntarily adopt the Taxonomy for the applications outlined (product labelling, development, identification, disclosures, risk management, and investment guidance).
• Internal Policy Integration: AIs should review and potentially update their internal policies and procedures to align with the Hong Kong Taxonomy and its principles. This might involve updating risk assessment methodologies, investment mandates, and product approval processes.
• Capacity Building: AIs may need to invest in training their staff on the Taxonomy's principles, criteria, and applications to ensure effective implementation.
• Disclosure Considerations: While not mandated by this specific circular, the Taxonomy provides a framework that could inform future disclosure requirements related to sustainable finance. AIs should be prepared for potential future reporting obligations that leverage this Taxonomy.
• Engagement with HKMA: AIs are encouraged to maintain dialogue with the HKMA regarding their adoption of the Taxonomy and to provide ongoing feedback as the Taxonomy continues to evolve.

Reporting Requirements: At present, no specific reporting requirements directly linked to the use of the Hong Kong Taxonomy (Phase 2A) are detailed in this circular. However, the HKMA often uses its circulars to signal future directions for supervision and reporting.

Implementation Guidance: The HKMA directs AIs to the official publication of the Hong Kong Taxonomy for Sustainable Finance (Phase 2A) for detailed implementation guidance. The following links are provided:

• Hong Kong Taxonomy: [https://brdr.hkma.gov.hk/eng/doc-ldg/docId/20260122-5-EN](https://brdr.hkma.gov.hk/eng/doc-ldg/docId/20260122-5-EN)
• Consultation Report: [https://brdr.hkma.gov.hk/eng/doc-ldg/docId/20260122-3-EN](https://brdr.hkma.gov.hk/eng/doc-ldg/docId/20260122-3-EN)

The circular refers to several key technical terms and concepts:

• Hong Kong Taxonomy for Sustainable Finance (Phase 2A): The formal output of this publication, representing a standardized classification system for economic activities aligned with sustainability objectives.
• Green and Sustainable Capital Flows: The movement of financial resources towards investments that have positive environmental and/or social impacts.
• Low-Carbon Economy: An economy that aims to minimize greenhouse gas emissions through efficient energy use and a transition to renewable energy sources.
• Economic Activities: Specific sectors or types of business operations that are evaluated for their sustainability attributes.
• Greenness and Transition Attributes: The circular mentions assessing both "greenness" (activities that directly contribute to environmental objectives) and "transition attributes" (activities that support the transition to a low-carbon economy).
• Phase 1: The initial release of the Hong Kong Taxonomy, published in May 2024.
• Phase 2A Prototype: The version of the Taxonomy that underwent public consultation starting on 8 September 2025.
• Consultation Report: A document summarizing feedback from the public consultation and the HKMA's responses, which is crucial for understanding the evolution of the Taxonomy.
• Authorised Institutions (AIs): Licensed financial institutions in Hong Kong regulated by the HKMA.
• Living Document: A term indicating that the Taxonomy is subject to ongoing updates and refinements.

Attachments/Appendices: The circular itself does not contain formal attachments or appendices within its text. However, it explicitly refers to two key documents published alongside it, which are essential for understanding the full scope and details of Phase 2A:

1. Hong Kong Taxonomy for Sustainable Finance (Phase 2A): This is the core Taxonomy document itself, containing the detailed classification criteria, definitions, and technical specifications for various economic activities. Its content is not summarized here but is the primary resource for understanding the Taxonomy's structure and specific requirements for each activity.
2. Consultation Report: This document provides a detailed breakdown of the feedback received during the public consultation on the Phase 2A Prototype. It will likely categorize feedback by theme, summarize key concerns and suggestions, and articulate the HKMA's rationale for accepting or rejecting certain proposals, thereby explaining the specific changes made in Phase 2A.

Numbers, Percentages, Amounts, Ratios: This circular does not contain specific numerical targets, thresholds, percentages, or amounts that AIs are required to meet at this stage. The Taxonomy document itself, which is linked, would contain such technical details regarding the criteria for classifying specific economic activities. The circular's focus is on the publication and encouragement of adoption rather than on specific quantitative compliance obligations.

In conclusion, this HKMA circular heralds a significant step forward in establishing a robust framework for sustainable finance in Hong Kong. By publishing the Hong Kong Taxonomy for Sustainable Finance (Phase 2A), the HKMA provides a vital tool for AIs and the broader market to channel capital towards sustainable activities, supporting Hong Kong's commitment to a green and low-carbon future. AIs are strongly encouraged to familiarize themselves with the Taxonomy and the accompanying Consultation Report to understand its implications and plan for its integration into their operations.