Introduction

This document provides a taxonomy of eligible projects, assets and supporting expenditures for use by issuers and originators of green debt instruments. Projects, assets and supporting expenditures included in this document are assumed to be eligible as long as any specific thresholds or criteria are met and any applicable exclusions are respected. The taxonomy addresses sector criteria, rationale for eligibility, potential environmental benefits and environmental performance indicators.

NOTE In this document, the wording “projects, assets and supporting expenditures” used together or individually has the same meanings and covers all projects, assets and supporting expenditures financed by a bond, a loan or other debt instrument.

The objective of the taxonomy is to identify projects, assets and supporting expenditures that contribute to one or more environmental objectives, while doing no significant harm (DNSH) to other environmental objectives. Issuers, borrowers or lenders are informed by:

a) the taxonomy of eligible projects, assets and supporting expenditures that are anticipated to contribute to climate change mitigation, including guidance on DNSH assessments (see Clause 5);
b) guidance on climate change adaption by economic sector (see Annex A);
c) examples of thresholds and exclusions that may be applied to specific economic sectors (see Annex B);
d) guidance on other suitable taxonomies (see Annex C).

Users of this document can apply threshold values and exclusions identified in the taxonomy in Annex B or the taxonomy selected by the user (see ISO 14030‑1:2021, 5.1, and ISO 14030‑2:2021, 5.1). If a different taxonomy is used, threshold values are explained and justified.

Subclause 5.4 provides sector examples for the taxonomy nominated projects, assets and supporting expenditures.

This document encourages the mitigation and adaptation pathway forward to contribute to a low-carbon and resilient society. Economic activities can themselves contribute to environmental objectives or can enable other activities to contribute to environmental objectives.

Within the taxonomy, eligible investment categories and subcategories are either:

— economic activities that can be decarbonized or that support decarbonization; or
— projects, assets and supporting expenditures that can enable improved environmental performance in another economic activity and are performed to avert a substantial negative impact on the environment.

The taxonomy facilitates decision-making on what economic activities are sustainable, with the aim of helping investors to identify sustainable investment opportunities. It is intended that the green taxonomy presented in this document will serve as a holistic tool that captures all relevant environmental objectives. Although most requirements relate to climate mitigation or climate adaptation, this document addresses other environmental aspects, issues and objectives relevant to each included sector.

This document recognizes that all sectors must become more climate resilient to achieve adaptation objectives and avoid maladaptation. As a result, the adaptation approach is a set of guiding principles and qualitative screening criteria which can be applied in any sector. However, to be included in the taxonomy, an economic activity must also avoid significant harm to the six other environmental objectives (see 5.3).

This document recognizes that all sectors must become more climate resilient. As a result, the do no significant harm (DNSH) section of each table in the taxonomy includes a set of considerations for addressing issues related to the eligible project and asset categories.

To provide guidance for projects, assets and supporting expenditures that are being financed with the specific purpose of promoting adaptation, this document includes guidance for adaptation by sector in Annex A.

This document defines sector categories or subcategories and describes the rationale for their inclusion in the taxonomy. It provides examples of thresholds and exclusions in Annex B.

Different types of finance support projects, assets and supporting expenditures that contribute to environmental or sustainable development objectives. In this taxonomy, debt instruments may either finance the acquisition, manufacture, development, distribution, operation and maintenance or refinance the listed projects, assets and supporting expenditures. The taxonomy provides a framework for classifying all potential projects, assets or supporting expenditures against a comprehensive set of environmental objectives. In addition, all eligible projects, assets and supporting expenditures have to consider the state of the local environment.

The objective of the taxonomy is to identify activities with positive environmental benefits.

It may be used as a separate resource or by users of ISO 14030‑1 and ISO 14030‑2 who can:

— select this document as their taxonomy and refer to its tables when establishing environmental performance indicators;
— adopt thresholds and exclusions detailed in Annex B.

This document requires issuers to evaluate and avoid harm to related environmental aspects.

The taxonomy focuses on activities within sectors. For this reason, environmental aspects are evaluated at the level of projects and assets. If buildings or materials are needed to finance the projects and assets, the evaluation is made at the level of the different potential environmental aspects, taking into account the life cycle perspective, including all upstream and downstream resource flows.

The taxonomy’s objective is to identify eligible projects, assets and supporting expenditures. Users of this document, or of another appropriate taxonomy, will obtain greater confidence that interested parties will consider financed projects, assets and supporting expenditures to be green.

To substitute high carbon intensity processes, some technologies can be implemented. The best available option should be taken in light of various circumstances of countries and regions.

Users of this document can adopt:

— thresholds and exclusions from Annex B;
— local, regional or international regulations;
— provisions found in other taxonomies.

Figure 1 outlines the relationship between the four parts of the ISO 14030 series.

Figure 1 — Relationship between the parts of the ISO 14030 series

BS ISO 14030-3:2022

Environmental performance evaluation. Green debt instruments - Taxonomy

Current

Published:

28 Feb 2023