Data and research provider Sustainable Fitch has said that the failure of “varied ambition and consistency” in taxonomies in Southeast Asia is hampering the widespread adoption of sustainability goals. The report said this will likely drive the market to coalesce around one or two standards. There are presently four taxonomies in the region: one in Singapore, one in Thailand, one in Indonesia and one that covers the ten member countries of the Association of Southeast Asian Nations bloc. In its report, Sustainable Fitch said that significant inconsistencies in the region are seen across coal – a vital energy source for many markets in Southeast Asia – as well as transition criteria for electricity generation from bioenergy power, geothermal energy and hydropower. “The application of transition taxonomies has been slow, even with improved guidance,” the report read. “Limited uptake could be attributed to the high benchmarks required for activities to qualify as transitional and access financing. Reputational risk may also deter companies from pioneering adoption, wary of being perceived as greenwashing.” Transition taxonomies aim to guide industries in reducing greenhouse gas emissions and to shift to more sustainable practices. Though some guidance has emerged in recent years, it remains limited. This has prompted Asian countries, including several in Southeast Asia, to develop their own taxonomies to capture and support nuanced transition efforts suited to local contexts.
