Accelerating the Energy Transition 2025

National and regional sustainable finance taxonomy coverage FIGURE 2 No taxonomy/framework/guidelines Green/sustainable bond framework Mandatory green/sustainable finance taxonomy Voluntary green/sustainable finance taxonomy0 25 50 75 100Percent of countries covered by taxonomies and frameworks AE EMDE Notes: AE = Advanced economies. EMDE = Emerging market and developing economies. Source: World Bank.18 The proliferation of standards and taxonomies can create market fragmentation, weakening the business case for multinational companies seeking scale across borders. Governments and businesses need common, agreed-upon standards for defining “clean” investments, providing investors with clear guidance to assess the sustainability of their portfolios. Governments must work closely with businesses and stakeholders from the outset, designing clear, reliable and long-term policies that reduce regulatory risk and provide consistent signals to investors. These policies should be bold enough to kickstart investment and provide positive incentives that address actual market needs. Early engagement ensures that policies remain pragmatically focused, while businesses, in turn, can align their investment strategies with government priorities, fostering a collaborative approach to the energy transition.Despite challenges such as the cost of environmental impact analysis for small and medium-sized enterprises and complex regulatory requirements, 47 sustainable finance taxonomies have been issued globally as of April 2024, spanning regulatory tools to green bond frameworks (see Figure 2).17In 2024, over 700 European companies reported €250 billion in EU Taxonomy-aligned investments, showing how structured policy frameworks can build corporate confidence. Accelerating the Energy Transition: Unpacking the Business and Economic Cases 12