The "Huxonomy" Approach in Green Financing

In the domestic market, relatively little is said about the "Huxonomy" approach. However, the MNB’s (Central Bank of Hungary) renewed Green Capital Requirement Discount Program continues to allow certain projects to access favorable green financing schemes through a simplified compliance pathway, rather than the full application of the EU Taxonomy.

One of the greatest advantages of this structure is that, in certain cases, it can reduce the administrative burdens and the overall costs associated with the compliance process.

The Two Main Approaches in Practice

Currently, two primary pathways can be distinguished:

• "Huxonomy 1": A simplified compliance logic based directly on the EU Taxonomy.

• "Huxonomy 2": A pathway linked to specific international certification systems—such as BREEAM, LEED, or DGNB. This is primarily attractive to developers and funders who have already integrated these certification systems into their development and financing practices.

Trade-offs and Limitations

• Lower Discounts: Huxonomy typically yields a lower capital requirement discount compared to full EU Taxonomy compliance.

• No Automatic Substitution: Certification systems do not automatically replace EU Taxonomy compliance. The EU Taxonomy remains an independent regulatory and financing framework with its own technical screening criteria, DNSH (Do No Significant Harm) requirements, and documentation expectations.

Key Takeaway: While the administrative and documentation side of the compliance process becomes more favorable, the financial incentives are scaled down accordingly.

Conclusion: Despite these limitations, the Huxonomy approach offers a realistic and pragmatic alternative for specific projects.