South Africa’s Green Finance Taxonomy: A Roadmap for Sustainable Growth
South Africa’s Green Finance Taxonomy clarifies what counts as sustainable, supports climate investment, and strengthens alignment with global standards—helping bridge the country’s climate finance gap.
Closing South Africa’s Sustainable Finance Gap
South Africa’s largest banks hold an estimated combined sustainable finance portfolio of nearly ZAR 700 billion (about US$ 44 billion), according to the Banking Association South Africa. Meanwhile, the Climate Policy Initiative (CPI) tracked an annual average of ZAR 188.3 billion (about USD 11.8 billion) in climate finance flows for 2022–2023. However, meeting the country’s climate goals will require far more – around ZAR 499 billion (about USD 31 billion) annually, as outlined in South Africa’s second Nationally Determined Contribution (NDC) submitted in October 2025, which details the mitigation and adaptation finance needed for 2031–2035.
To facilitate this journey towards a sustainable economy, the National Treasury of the Republic of South Africa published the Green Finance Taxonomy (SAGFT) in March 2022.
What the South Africa Green Finance Taxonomy Does
The SAGFT establishes a clear framework for identifying environmentally sustainable activities and assets, setting thresholds and criteria to support consistent assessment across sectors in line with relevant national policies. By defining what qualifies as “green”, the taxonomy unlocks access to international capital flows and positions South Africa within global investment standards. It enables foreign investors to evaluate local projects using familiar benchmarks, reducing barriers to cross‑border investment. For stakeholders, taxonomy alignment enhances risk management, making projects more resilient to climate-related disruptions and regulatory changes – strengthening South Africa’s competitiveness in a rapidly evolving sustainable economy.
Core Principles of the Taxonomy
The taxonomy builds on three core principles, aligned with global best practice and foundational frameworks such as the EU Taxonomy:
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- Substantial Contribution: Activities must significantly advance at least one of six environmental objectives – climate change mitigation, adaptation, water and marine resource sustainability, pollution prevention, circular economy, and ecosystem protection
- Do No Significant Harm (DNSH): Projects must avoid causing material harm to other environmental objectives, ensuring compliance with South African environmental laws and safeguarding biodiversity and water resources
- Minimum Social Safeguards (MSS): Activities must uphold social standards and human rights, including South Africa’s labour rights, community protections, and constitutional rights and anti-discrimination norms
The SAGFT currently focuses on climate change mitigation and adaptation, with technical screen criteria covering sectors such as Agriculture, Forestry & Fisheries, Industry, Energy, Water & Waste, Transportation, ICT, and Construction. Future updates are planned to expand its scope to circular economy and ecosystem restoration. Clear guidance and thresholds are being developed to enhance usability and compliance.
Alignment with Global Frameworks
By referencing the EU Taxonomy Climate Delegated Act, the SAGFT establishes strong alignment with international frameworks. It mirrors the EU Taxonomy in its core structure, Technical Screening Criteria, Do No Significant Harm principles and Minimum Social Safeguards, while adapting these elements to South Africa’s local context. This alignment strengthens global interoperability and investor confidence.
A 2025 review by the Climate Policy Initiative and GreenCape confirmed SAGFT’s high international interoperability, recommending refinements to DNSH and MSS. The National Treasury of the Republic of South Africa has also published a comparison with the EU Taxonomy, highlighting key similarities and differences – further positioning SAGFT as a credible, globally connected framework for sustainable investment.
How ISS-Corporate Can Help
ISS-Corporate provides independent taxonomy alignment assessments across major global frameworks, including the EU, Australian, Thai, and Hong Kong taxonomies, Common Ground Taxonomy, and Climate Bonds Initiative standards. By December 2025, we supported over 120 issuers – among them sector leaders such as Deutsche Kreditbank AG, Societe Generale SA, Alliander NV, Argenta Spaarbank NV, Verbund, Victoria Power Network, and Chinachem Group – in demonstrating alignment for green finance instruments. Our robust methodology evaluates Technical Screening Criteria, DNSH, and social safeguards, offering flexible options for full or partial alignment reviews and eligibility checks. These assessments can be flexibly tailored to suit the varying needs of issuers, including being delivered as standalone reports or integrated into Second Party Opinions, adding credibility and investor confidence to green finance issuances.
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