Nonprofit organisations the Climate Policy Initiative and GreenCape have published a technical report called ‘Assessing International Interoperability and Usability of the South African Green Finance Taxonomy’, which highlights how South Africa’s Green Finance Taxonomy (SA GFT) can improve international alignment and interoperability while also addressing usability challenges.

The report, prepared for the National Treasury, provides recommendations that aim to ensure the SA GFT remains a globally competitive framework for sustainable finance.

As climate finance flows increase, seamless cross-border investments are crucial to achieving national and global net-zero targets, the organisations emphasise.

The SA GFT is internationally aligned, covering broad environmental objectives and economic sectors, particularly in climate change mitigation, compatible with global taxonomies and the Paris Agreement.

However, there are still some usability and adoption challenges, the organisations point out.

These are said to include issues with the Do No Significant Harm (DNSH) and Minimum Social Safeguards (MSS) pillars.

Addressing these concerns requires clear guidelines, stronger governance and improved processes, the organisations assert.

Key findings and recommendations from the report include balancing international interoperability with localisation, with a call to incorporate elements such as specific sectoral activities and metrics tailored to South Africa’s sustainability challenges and opportunities.

It also advises improving usability and implementation, that is, providing clearer guidance on DNSH and MSS compliance to support adoption by providing quantitative thresholds, clearly referencing domestic regulations and standards and providing reporting guidelines.

Another is standardising disclosure frameworks, which entails developing common metrics that align with widely recognised sustainability reporting frameworks for transparency and market confidence.

Lastly, it advises that the country foster collaboration. As one of the earliest adopters of a sustainable finance taxonomy and the first in Africa, South Africa is well positioned to advance interoperability efforts between taxonomies, particularly in areas where it has already set robust technical screening criteria, the organisations aver.