Introduction

Climate change poses significant global risks, with Asia warming faster than the global average. The Singapore-Asia Taxonomy for Sustainable Finance was developed by the Monetary Authority of Singapore’s Green Finance Industry Taskforce with support from the Climate Bonds Initiative to guide capital towards environmentally sustainable and transition activities.

The taxonomy establishes science-based technical screening criteria for economic activities that contribute to environmental objectives aligned with Singapore’s climate commitments, including its Nationally Determined Contribution and the Singapore Green Plan 2030. It is intended to support financial institutions, investors and policymakers in identifying and financing activities that contribute to a low-carbon transition in Singapore and ASEAN.

Benefits of the taxonomy

The taxonomy aims to improve transparency and consistency in the classification of environmentally sustainable activities. By providing common definitions and criteria, it reduces ambiguity around sustainable finance products and supports the growth of green financing and investment markets.

It also facilitates portfolio classification and disclosure by financial institutions, enabling clearer reporting on green or transition activities. The framework supports engagement between financial institutions and companies by establishing a common language for discussing sustainability performance. Regulators may also use the taxonomy to assess financial stability risks linked to environmentally unsustainable activities.

Assessing the success of the taxonomy

The effectiveness of the taxonomy will be evaluated through its adoption and the availability of relevant data for classification and disclosure. Indicators of success include the degree to which regulators require taxonomy-aligned disclosure and whether data providers integrate taxonomy classifications into their products.

Monitoring whether disclosure requirements impose excessive reporting burdens on companies—particularly small and medium-sized enterprises—is also recommended. Periodic assessment will help determine whether tools and guidance adequately support market participants in implementing the taxonomy.

Environmental objectives

The taxonomy is designed to encourage capital flows supporting environmental goals across Singapore and ASEAN. It aligns broadly with the environmental objectives used in international frameworks such as the EU Taxonomy.

Five environmental objectives underpin the framework: climate change mitigation, climate change adaptation, protection of ecosystems and biodiversity, promotion of resource resilience and circular economy practices, and pollution prevention and control. The current edition focuses primarily on technical screening criteria for climate change mitigation activities.

Guiding principles for the development of the taxonomy

The taxonomy is built on several guiding principles. It is science-based, drawing on climate science and data sources such as the EU Taxonomy, Science-Based Targets initiative and Climate Bonds Initiative to determine thresholds and criteria.

It is also Singapore-focused, reflecting local economic and geographic conditions while maintaining compatibility with international frameworks. Activities are structured using International Standard Industrial Classification (ISIC) codes to enhance interoperability with other taxonomies and support global investment portfolios managed by Singapore-based financial institutions.

Traffic lights: Green, amber, and ineligible classifications

The taxonomy uses a traffic-light system to classify economic activities as green, amber or ineligible. Green activities are those that operate at near-zero emissions or align with a 1.5°C pathway consistent with the Paris Agreement.

Amber activities represent transition activities that are moving towards alignment with the Paris Agreement but do not yet meet the green thresholds. These are primarily applied to existing infrastructure and include defined transition pathways or improvement targets.

Ineligible activities are those incompatible with the taxonomy criteria or inconsistent with a 1.5°C pathway, including certain fossil-fuel-related activities or operations that fail to meet emissions thresholds.

Application of the taxonomy

The taxonomy is intended primarily for financial institutions providing equity and debt financing, including asset managers, private equity investors and infrastructure financiers. It may also be used by companies to align operations with sustainable activities and access green financing opportunities.

Regulators, policymakers and ESG data providers can apply the taxonomy to support regulatory oversight, research and product development. The framework is initially voluntary and may evolve to support disclosure guidance or financing instruments such as green bonds and loans.

Governance and ownership of the taxonomy

The taxonomy was developed through a collaborative process involving financial institutions, corporates, government agencies and civil society organisations under the Green Finance Industry Taskforce. The Monetary Authority of Singapore convened the initiative and coordinated stakeholder consultation.

The framework is intended to be a living document subject to revision as technologies, climate science and policy frameworks evolve. Future governance and updates will be managed by the Singapore Sustainable Finance Association to maintain the taxonomy’s relevance and effectiveness.

Technical screening criteria

The taxonomy provides detailed technical screening criteria for activities across key sectors including energy, transport and real estate/construction, with additional sectors such as industry, forestry, ICT, waste, water and agriculture addressed progressively.

For example, in the energy sector, renewable electricity generation technologies such as solar, wind and geothermal qualify as green where lifecycle emissions remain below defined thresholds (e.g., 100gCO₂e/kWh). Activities exceeding these limits or supporting fossil-fuel infrastructure are classified as ineligible.

Transport criteria prioritise zero-emission solutions such as electric vehicles and low-carbon shipping aligned with international standards. In some cases, transition pathways—such as the use of sustainable aviation fuels or improvements in heavy-duty vehicle efficiency—are permitted under amber classifications with sunset dates around 2030 to encourage progression towards green activities.