A sustainable or green taxonomy is a classification system that provides a common language and clear definition for what constitutes sustainable economic activities and assets, helping to facilitate alignment of financial flows with environmental and climate goals. Taxonomies provide businesses and investors with appropriate definitions for economic activities that are considered environmentally sustainable and help prevent greenwashing – misleading claims about environmental performance. The use of taxonomy-based approaches for scaling sustainable finance has gained traction and since 2019, global taxonomy development has reached notable milestones in various countries. 
As increasing amounts of capital are mobilized around sustainable themes, it is critical that commensurate frameworks are developed to ensure that they deliver their intended impact. By applying a regulatory framework that establishes structure and clarity on what is considered environmentally friendly, a sustainable taxonomy provides countries with assurance that financing and investments in the low-carbon economy are being channeled to truly sustainable activities. As of April 2022, 36 countries have developed green taxonomies, including China, South Korea, and countries of the European Union. An additional 12 countries have taxonomies under development. Between those developed and in development, 24% of countries globally are covered by a sustainable or green taxonomy. 

A sustainable or green taxonomy is a classification system that provides a common language and clear definition for what constitutes sustainable economic activities and assets, helping to facilitate alignment of financial flows with environmental and climate goals. Taxonomies provide businesses and investors with appropriate definitions for economic activities that are considered environmentally sustainable and help prevent greenwashing – misleading claims about environmental performance. The use of taxonomy-based approaches for scaling sustainable finance has gained traction and since 2019, global taxonomy development has reached notable milestones in various countries. 
As increasing amounts of capital are mobilized around sustainable themes, it is critical that commensurate frameworks are developed to ensure that they deliver their intended impact. By applying a regulatory framework that establishes structure and clarity on what is considered environmentally friendly, a sustainable taxonomy provides countries with assurance that financing and investments in the low-carbon economy are being channeled to truly sustainable activities. As of April 2022, 36 countries have developed green taxonomies, including China, South Korea, and countries of the European Union. An additional 12 countries have taxonomies under development. Between those developed and in development, 24% of countries globally are covered by a sustainable or green taxonomy.