Official Launch of South Africa’s First Green Finance Taxonomy
1 April 2022 — Following a two-year consultation and development process, South Africa’s first national Green Finance Taxonomy was launched by the Taxonomy Working Group, as part of South Africa’s Sustainable Finance Initiative, chaired by National Treasury. The Taxonomy is designed for investors, issuers, lenders and other financial sector participants to track, monitor, and demonstrate the credentials of their green activities in a more confident and efficient way. Read National Treasury Media Statement.
Download the Taxonomy (1 April 2022)
Download supporting documents (March 2022)
- Briefing Paper — Development Process for the South African Green Finance Taxonomy
- Briefing Paper — Starting with green and ending with sustainable
- Briefing Paper — South Africa’s ambitious Green Finance Taxonomy: Why and how South Africa’s ambitious Green Finance Taxonomy is aligned with the EU Sustainable Finance Taxonomy
- Briefing Paper — Developing a Buildings Taxonomy Entry for South Africa
What is a green finance taxonomy?
A green finance taxonomy is an official classification or catalogue that defines a minimum set of assets, projects, and sectors that are eligible to be defined as “green” or environmentally friendly. It supports emerging national policy and voluntary private sector initiatives toward sustainable finance by reducing costs and uncertainty in classifying a core set of green activities.
About the National Green Finance Taxonomy Project
Under the leadership of National Treasury, and with support from IFC, the National Business Initiative (NBI) and Carbon Trust, the Taxonomy Working Group developed a first national Green Finance Taxonomy for South Africa between June 2020 and March 2022.
This is one of the key recommendations of the National Treasury Technical Paper on Financing a Sustainable Economy (October 2021).
The initial phase of work was supported by IFC, part of the World Bank Group, in partnership with SECO (Swiss State Secretariat for
Economic Affairs) and Sida (Swedish International Development Cooperation Agency)
Scroll down for more information and additional Project Resources.
Stakeholder Consultation Process
The Taxonomy Working Group concluded an extensive consultation process in February 2022 to develop a National Green Finance Taxonomy.
The following stakeholder consultation webinars were held in October and November 2020 to get stakeholder input from different user-groups to inform the development of a Green Finance Taxonomy for South Africa.
- October 12 — Policy Makers and Government Agencies
- October 13 — Collaboration Engagements
- October 16 — Financial Market Practitioners
- October 19 — Land-Use and Biodiversity Sector
- October 21 — Multilateral Development Institutions
- November 6 — Companies and Project Developers
Draft documents were published in June 2021 for public comment until 14 July 2021.
Consultation documents are still available via the following links.
- Draft Green Finance Taxonomy (June 2021)
- Draft User Guidance Summary Presentation (June 2021)
- Draft Green Finance Taxonomy User Guidance (June 2021)
- Listing of developmental aspects (June 2021)
Read the full Call for Stakeholder Inputs.
In addition, the draft taxonomy was tested by a number of local banks, asset managers, and pension funds to understand the practical implications of implementation.
More about the Taxonomy Working Group
A Steering Committee and Working Groups were established to support the implementation of the Technical Paper recommendations. These include a Taxonomy Working Group chaired by National Treasury and including representatives from
- South Africa’s Department of Forestry, Fisheries and the Environment (DFFE)
- Department of Monitoring and Evaluation (DPME)
- The Financial Sector Conduct Authority (FSCA)
- The Prudential Authority (PA)
- The Johannesburg Stock Exchange (JSE)
- The Banking Association South Africa (BASA)
- Batseta (Council of Retirement Funds for South Africa)
- The Association for Savings and Investment South Africa (ASISA)
- Representatives from banks and retirement funds.
The purpose of the Working Group is to develop a taxonomy for green, social and sustainable finance initiatives for the South Africa financial services industry, as recommended by National Treasury’s Financing a Sustainable Economy Technical Paper (2020).
A taxonomy, in the context of sustainable finance, is a classification system identifying activities, assets, and/or project categories that deliver on key climate, green, social or sustainable objectives with reference to identified thresholds and/or targets.
The Climate Risk Forum’s Steering Committee has mandated the establishment of the working group.
Area of Focus
The focus is to develop a taxonomy to take the first critical steps towards ensuring that economic activities are green, and positions South Africa as a resilient, competitive and low carbon economy and society. The taxonomy should not seek to solve all problems for all stakeholders.
The immediate practical priorities and focus areas for the South African financial sector include risks and challenges posed by climate change and the role of the financial sector to respond to these. As such, the initial focus is on a green taxonomy, which provides a manageable starting point.
International taxonomies will be reviewed and the structure, principles, activities and thresholds adapted where applicable. In addition, potentially uniquely South African economic activities will be considered, such as economic activity that addresses social and vulnerable transitions; transition projects; and South African specific development concerns relevant for adaptation and resilience investment needs. Climate change (risk and finance) will be included in the scope of a Green Taxonomy. These may take the form of specific additional criteria and/or adjusted thresholds.
1. Establish Taxonomy
Establish the ‘Version 1’ taxonomy as a platform upon which to build, having defined currently accepted definitions and guiding principles for classifying assets and projects as “green”. This will broadly include, but not be limited to, providing technical review and guidance on the development of
- Definitions and principles
- Thematic areas
- Screening criteria for economic activities for inclusion/exclusion and methodologies applied for developing technical screening criteria
- Differentiating dimensions for economic activities
- Integrating local context technical criteria
Provide inputs on a process for future adaptation, iteration and refinement of the taxonomy, supplements, and set of principles. This it to allow the taxonomy to easily evolve for social and sustainable finance, and the inclusion or exclusion of future economic activities or investment contexts that haven’t to date been considered.
Provide recommendations on how to ensure that the taxonomy has a clear custodian who is to maintain and continue the evolution of the taxonomy.
Kick-off webinar, 9 July 2020 – Green Recovery: Stimulating Post-COVID Economic Competitiveness in South Africa
Project briefing report, 8 October 2020 – Developing a National Green Finance Taxonomy
Version Zero Stakeholder Workshops slide-deck, October 2020 – South African Green Finance Taxonomy
Stakeholder Presentations, October and November 2020
12 October 2020
- National Climate Change Adaptation Strategy – Alinah Mthembu, Climate Change Adaptation-Natural Resources, Department of Environment, Forestry & Fisheries (DEFF)
- Overview of the Energy RDI Programme/Strategy to leverage funds for demonstration – Dr Rebecca Maserumule
- Introduction to the National Climate Change Information System (NCCIS) – Department of Department of Environment, Forestry & Fisheries (DEFF)
- Green industrial development and the benefits of a taxonomy – Muhammed Patel, Gaylor Montmasson-Clair, Trade & Industrial Policy Strategies (TIPS)
- Climate Bonds Initiative Input into the NBI workshop Green Finance Taxonomy for South Africa – Bridget Boulle & Sean Kidney, Climate Bonds Initiative
- City of Tshwane Climate Action Plan – Sello Mphaga Divisional Head: City Sustainability
16 October 2020
- The JSE view on the use case for a Green Finance Taxonomy – Shameela Soobramoney (Chief Sustainability Officer), JSE
- Example of an internal Green Economy Taxonomy, 16 October – Waleed Hendricks, Old Mutual Investment Group
- Developing a National Green Finance Taxonomy Stakeholder Engagement – Sunette Mulder, Association for Savings and Investment South Africa (ASISA)
19 October 2020
- Stakeholder Consultation: Green Taxonomy, 19 October 2020 – Nehru Pillay, Land Bank
21 October 2020
- How the AFDB Finances Climate Change and Green Growth – Musole M. Musumali, Climate Change and Green Growth Officer, Climate Change and Green Growth Department
- Green Bonds Work Green Economy Transformation Project (GET) South Africa Global IKI Project Green Economy Transformation in cooperation with PAGE – Nondumiso Dumakude, GIZ
6 November 2020
- Built Environment Development of Green Finance Taxonomy for South Africa, 6 November – Lisa Reynolds, Green Building Council South Africa
- PPC Climate Projects, 6 November – Tshilidzi Ligaraba, PPC Ltd.