The Implementation of the South African Green Finance Taxonomy

Focussing on the case of the South African Green Finance Taxonomy, the research project studies the implementation of sustainability taxonomies as they have recently been developed in many countries around the world. The focus of the project will be on barriers to the implementation of taxonomies, their regulatory embedding, and questions concerning the interoperability of different taxonomies.

Project Lead:
Kathrin Berensmann
Hilbrich, Sören

Project Team:

Giovanna Artmann (International Development Studies)

Theresa Herbold (Agricultural Economics)

Steffen Lötters-Viehof (InternationalRelations and development policy)

Agnese Monti (Political Science- Political Economy Track)

Felix Paffhausen (Public Policy & Management)

Stephanie Roigk (Money and Finance)

Time frame:
2022 - 2023 / completed

Co-operation Partner:

College of Business and Economics, University of Johannesburg, University of Stellenbosch Business School, South African Reserve Bank (SARB), Carbon Trust

Project description

In recent years, several countries and regional organisations have developed and implemented green finance taxonomies that classify economic activities according to sustainability criteria. Taxonomies should support financial markets in redirecting capital flows to more sustainable investment projects. Their impact will depend largely on how they are used, how the alignment of different taxonomies can be ensured, and how the taxonomies are linked to other policies and instruments. In principle, many different kinds of policies, such as reporting rules for enterprises, disclosure requirements with respect to financial products, public labels, capital requirements of private banks, and investment and lending policies of public banks, can be linked to green finance taxonomies.

Research on taxonomies has been limited until now. While there are a few studies from international organisations, there is hardly any academic literature. Against this background, the research team will conduct a case study on the South African taxonomy (the case of the EU taxonomy will also be considered). In particular, the research project will focus on challenges for different stakeholders in the usage of the taxonomy and the regulatory embedding of the taxonomy. In addition, the project might address questions concerning the interoperability of different taxonomies.

The data collection will rely on a document analysis of relevant governance frameworks and on semi-structured interviews with experts and stakeholders. This includes, for instance, financial market participants, regulators, and representatives of NGOs. In addition, other data sources, such as a survey with potential users of taxonomies from the private sector might be taken into account.

As political decisions about the implementation of taxonomies will have to be taken in South Africa and many other countries in the coming years, the project has the potential to generate highly relevant and timely policy recommendations and could also describe lessons learnt from the South African case for other countries.