Assessment finds South Africa's green finance taxonomy broadly interoperable but flags safeguard gaps

The Climate Policy Initiative (CPI) published on 27 February 2025 an assessment of the international interoperability and usability of the South African Green Finance Taxonomy (SA GFT), prepared for South Africa's National Treasury. It found that the taxonomy shows high international interoperability and alignment on its substantial-contribution criteria, but that users face challenges in demonstrating alignment with its do-no-significant-harm (DNSH) and minimum social safeguards (MSS) requirements.

The SA GFT classifies activities as green if they make a substantial contribution to at least one of six environmental objectives, do no significant harm to the other five and meet minimum social safeguards. The assessment, whose authors include Chavi Meattle and Shengzi Li, found broad coverage of environmental objectives and economic sectors, with climate change mitigation the most developed objective, supporting alignment with the goals of the Paris Agreement.

GOVERNANCE AND USABILITY GAPS

The report found that current governance and disclosure frameworks lack clarity on roles and responsibilities, among other structural issues that hinder implementation. It said clear user guidelines and practical guidance were needed to reduce ambiguity in applying the DNSH and MSS criteria.

RECOMMENDATIONS

On substantial contribution, CPI recommended that South Africa use the taxonomy's wide activity coverage to advance interoperability with G20 sustainable finance initiatives and African regional efforts, balance international alignment with local context, develop correspondence tables and toolkits, and collaborate with other jurisdictions. On DNSH, it proposed a flexible classification distinguishing eligible from aligned activities, working groups to improve usability and disclosure, quantitative thresholds in place of subjective criteria, and clearer references to existing regulations.

On social safeguards, the report recommended integrating national legislation such as the Broad-Based Black Economic Empowerment Act and the Women Empowerment and Gender Equality Bill, engaging stakeholders on compliance challenges, developing standardised metrics aligned with GRI, SASB and JSE frameworks, and designing integrated social due-diligence reporting.