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The implementation of sustainability taxonomies: The case of South Africa

Author

Listed:
  • Hilbrich, Sören
  • Berensmann, Kathrin
  • Artmann, Giovanna
  • Ashman, Sam
  • Herbold, Theresa
  • Lötters-Viehof, Steffen
  • Monti, Agnese
  • Paffhausen, Felix
  • Roigk, Stephanie
  • Steenkamp, Lee-Ann

Abstract

In recent years, many jurisdictions have developed sustainability taxonomies that aim to increase transparency of financial markets and redirect capital flows to sustainable investments. Such sustainable finance policies can be important levers because today's investments shape economic production processes for decades. This case study on South Africa's Green Finance Taxonomy (GFT) addresses the question of what factors influence the adoption of sustainability taxonomies by potential users. It finds that one year after its publication, the GFT has hardly been used in practice. Important factors hindering an effective implementation are a lack of regulatory embedding, the absence of a legal recognition of the GFT by the European Union (EU), a hesitancy among financial market participants to build capacities to collect the necessary data, and fossil-fuel path dependencies in South Africa's economy. These findings have important policy implications (e.g. regarding accompanying governance measures) for implementation processes in many countries in the coming years.

Suggested Citation

  • Hilbrich, Sören & Berensmann, Kathrin & Artmann, Giovanna & Ashman, Sam & Herbold, Theresa & Lötters-Viehof, Steffen & Monti, Agnese & Paffhausen, Felix & Roigk, Stephanie & Steenkamp, Lee-Ann, 2023. "The implementation of sustainability taxonomies: The case of South Africa," IDOS Discussion Papers 15/2023, German Institute of Development and Sustainability (IDOS).
    • Handle: RePEc:zbw:diedps:282979
    DOI: 10.23661/idp15.2023
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    1. Hervé Stolowy & Luc Paugam, 2018. "The expansion of non-financial reporting: an exploratory study," Accounting and Business Research, Taylor & Francis Journals, vol. 48(5), pages 525-548, July.
    2. Channing Arndt & Rob Davies & Konstantin Makrelov & James Thurlow, 2013. "Measuring the Carbon Intensity of the South African Economy," South African Journal of Economics, Economic Society of South Africa, vol. 81(3), pages 393-415, September.
    3. Alessi, Lucia & Battiston, Stefano, 2022. "Two sides of the same coin: Green Taxonomy alignment versus transition risk in financial portfolios," International Review of Financial Analysis, Elsevier, vol. 84(C).
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    Keywords

    Green finance; sustainable finance; green taxonomy; sustainability taxonomy; South Africa; financial markets; policy implementation;
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