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ASEAN FINANCE SECTORAL BODIES RELEASE ASEAN TAXONOMY FOR SUSTAINABLE FINANCE
VERSION 2
The ASEAN Taxonomy Board (ATB), representing ASEAN finance sectoral bodies, today took the next
step towards meeting the Paris Agreement commitments, with the release of the ASEAN Taxonomy
for Sustainable Finance Version 2 (Version 2). While the first version laid out the broad framework of
the ASEAN Taxonomy, Version 2 consists of the (a) complete Foundation Framework comprising
detailed methodologies for assessing economic activities; and (b) Technical Screening Criteria (TSC)
for the first focus sector ie Electricity, Gas, Steam and Air Conditioning Supply sector (Energy sector)
under the Plus Standard. TSCs for other focus sectors will be published in the subsequent versions of
the ASEAN Taxonomy. Version 2 builds on the conceptual thinking of the multi-tiered framework
outlined in Version 1. The multi-tiered framework is intended to facilitate transition of ASEAN Member
States (AMS) recognising the diversity in economic development, financial sector, and infrastructure
maturity.
Through the Foundation Framework which adopts a principles-based approach, users are now able to
qualitatively assess economic activities using guiding questions, decision trees and use cases for all
the four environmental objectives(EOs) and three essential criteria (EC). The environmental objectives
and essential criteria, as well as guiding questions that make up the Foundation Framework are
designed to be readily applicable to all AMS as well as stakeholders in the financial sector and business
enterprises. Using the guiding questions, activities are classified as Green, Amber or Red.
The Plus Standard adopts a more advanced assessment and methodology that is based on specific TSC
and science-based thresholds in classifying activities. To further encourage and recognise transition
efforts by businesses, the Plus Standard contains Amber Tier 2 and Amber Tier 3 classifications which
will be retired over time. This is in addition to the Green tier that is aligned with other relevant
international taxonomies and benchmarked to the 1.50C Paris Agreement target.
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Version 2 also highlights the importance of social aspects in the Taxonomy, by incorporating it as the
ASEAN Taxonomy’s third EC, alongside “Do No Significant Harm” (DNSH) and “Remedial Measures to
Transition” (RMT). In combination with other features such as the expansion of the “Do No Significant
Harm” criteria, common building blocks are established to enable an orderly and just transition and
foster sustainable finance adoption by ASEAN countries.
In considering ASEAN’s specific circumstances, the Taxonomy recognises efforts to the early
retirement of coal-fired power plants. A global first for a regional taxonomy, the ATB has thoroughly
considered how and where coal phase-outs (CPOs) can play a role in decarbonisation in support of the
Paris Agreement goals and when approached correctly, provides a powerful tool for transition.

The ASEAN Taxonomy Version 2 can be found at the following websites: • Association of Southeast Asian Nations – https://asean.org/wpcontent/uploads/2023/03/ASEAN-Taxonomy-Version-2.pdf