On November 4th, 2021, the International Platform on Sustainable Finance (IPSF), which was jointly launched by economies including China and the EU, released the Common Ground Taxonomy-Climate Change Mitigation (the CGT) at its annual event held on the sidelines of the UN COP 26 in Glasgow.

The IPSF established a working group on taxonomy in July 2020, with the PBoC and EU Commission being the co-chairs. Based on a comprehensive and detailed comparison of China’s Green Bond Endorsed Project Catalogue and EU Taxonomy Climate Delegated Act, the working group produced the CGT.

The CGT includes a list of economic activities that are recognized both by China’s and EU green taxonomies and have substantial contribution to climate change mitigation. The current CGT covers economic activities in six areas: energy, manufacturing, construction, transportation, solid waste management and forestry.

The CGT reflects key highlights in both China’s and EU green taxonomies. It is expected to support China-EU green finance cooperation and mobilize cross-border climate financing by lowering the green certification cost for cross-border transactions. It could be used as a voluntary reference by market participants when issuing or trading green financial products.

The working group plans to expand the scope of the CGT to include more sustainable activities, which will contribute to greater comparability, interoperability and consistency of sustainable taxonomies.