With sustainability-related regulations being enacted globally, carbon and sustainability data are no longer merely environmental showcases; they now directly affect trade, finance, and competitive advantage. As different regulations are implemented around the world – including carbon mechanisms, taxonomies, and related disclosure obligations – companies are increasingly required to measure and verify their sustainability performance. With this shift, the key question for investors, financial institutions, and large buyers has changed:
It is no longer a question of “Which regulation are you compliant with?” but rather,
“How quickly, accurately, and on an evidence-based basis can you meet these requirements?”
For companies, therefore, the critical challenge as of 2026 is not to focus on a specific country or regulation, but to manage a level of organizational preparedness that enables them to respond simultaneously to sustainability regimes operating differently across the globe.
Why do taxonomies differ among countries?
Despite the growing importance of sustainability taxonomies, the global landscape that has emerged is far from ideal. Regional and sectoral differences have led to significant fragmentation among taxonomies and a decline in comparability; this not only undermines their credibility and effectiveness but also creates barriers to cross-border trade. Today, sustainability taxonomies sit at the center of sustainability regulations, particularly within the scope of corporate reporting and disclosure requirements.
As the number of taxonomies continues to grow rapidly, the range of financial products labeled as “green” or “sustainable” is expanding at the same pace. The primary reason sustainability taxonomies differ from country to country is that each country uses different tools to shape its:
- Economic structure
- Financial system
- And policy priorities.
The European Union views the redirection of investments toward sustainable activities as a critical tool for achieving its 2030 climate and energy targets and for delivering the objectives of the European Green Deal. Accordingly, driven by the need for a common language and clear definitions of what constitutes a “sustainable” economic activity, the EU has designed its taxonomy as a classification system based on binding and measurable criteria.
By contrast, the United States does not have a single, official green taxonomy comparable to that of the EU. Instead, it relies on a fragmented framework comprising sector-specific regulations and guidance issued by domestic institutions such as the Securities and Exchange Commission (SEC), the Environmental Protection Agency (EPA), and the Department of Energy (DOE); SEC climate disclosures related to companies’ reporting of climate-related risks and impacts; voluntary frameworks used by companies and investors (such as reporting aligned with the Task Force on Climate-related Financial Disclosures (TCFD) and clean energy standards); and provisions – particularly under the Inflation Reduction Act – that define “green” activities through tax incentives. However, these elements do not amount to a comprehensive taxonomy, so the United States has adopted a decentralized and fragmented approach rather than a centralized and holistic green taxonomy.
In addition to federal-level regulations applicable across all states, implementation-oriented rules are also being enacted through state-level legislation. For example, in October 2023, the State of California adopted the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act, which impose reporting obligations on companies meeting certain thresholds. More recently, the United States introduced an ESG labeling regime aimed at preventing greenwashing by ensuring that investment funds do not mislead investors regarding their content, and rules governing fund naming conventions have been defined within this framework.
On the other hand, the Turkish Green Taxonomy provides a strong example of why taxonomies differ across countries. Türkiye has designed its taxonomy as a binding framework aligned with its 2053 Net Zero Emissions target and green transformation vision, incorporating reporting and verification obligations while steering access to finance. Similar to the European Union, it is based on the principles of “substantial contribution,” “do no significant harm,” and minimum social safeguards; however, its scope and priorities are tailored to Türkiye’s economic structure, sectoral composition, and transition needs. In this respect, the Turkish Taxonomy offers a balanced and implementation-oriented framework aimed both at reducing greenwashing risks and at supporting the transformation of high-carbon sectors by explicitly defining transition activities. The implementation of the taxonomy and the updating of its technical criteria are centrally managed by the Directorate of Climate Change.
Whereas in the United Kingdom, the primary objective of the green taxonomy is to direct investments toward activities aligned with sustainability goals and to reduce the risk of greenwashing. However, the UK Government is aware that taxonomies can be complex in practice and that views differ across the market regarding the value they provide. Consequently, the consultation process has focused on assessing whether the UK Green Taxonomy should serve as an additional and complementary tool to existing sustainable finance policies, whether it genuinely supports market participants’ sustainable investment decisions, and in which regulatory or market use cases it could be most effective.
Contrarily, in the case of China, the taxonomy is positioned not merely as a classification tool but as a direct policy instrument guiding sectoral transformation. Published on 14 July 2025, the China Green Finance Taxonomy consolidates standards for green loans and green bonds and clearly defines which economic activities are considered “environmentally sustainable,” with the aim of directing investors, banks, and companies toward projects aligned with climate and environmental objectives. By expanding the scope of green finance to include areas such as “green trade” – covering products like electric vehicles and high-efficiency solar panels – and “green consumption,” referring to the acquisition of such products by end users, the taxonomy offers a comprehensive transformation framework spanning from production to consumption.
Common Ground: The Expectation Is Essentially the Same
Although the approaches differ, the shared expectation and mission across all of these regimes is clear: measurable performance, consistent data, supply chain visibility, and traceable improvement over time. While the name and structure of regulations may change, the need for high-quality data and credible evidence does not.
One Preparation for Multiple Regulations with CGE
CGE helps companies move beyond trying to comply with individual regulations one by one, and instead build a level of preparedness that operates independently of specific regulatory frameworks. Through its assessment methodology, the current state is measured objectively and gaps are clearly identified; benchmarking and trend analysis then enable performance improvements to be tracked over time. Its evidence-based reporting and its specialised AI-powered approach transforms these outcomes into decision-support tools for boards of directors, investors, and financial institutions.
Oğuz ER / Sustainability Specialist Assistant