Explaining divergent sustainable finance taxonomies: comparing Taiwan and South Korea

Sustainable finance taxonomies are increasingly used by governments as policy instruments to define environmentally sustainable activities and guide economic transition. How these frameworks are translated into domestic governance arrangements outside Europe remains underspecified. This article compares Taiwan and South Korea, two export-oriented East Asian developmental states that initially referenced the EU Taxonomy but produced divergent frameworks. The empirical basis comprises 2 focus groups and 10 semi-structured interviews involving 23 participants, together with 31 policy and media documents covering 2017 to 2025, analysed through within-case process tracing and cross-case comparison. The analysis traces divergence to three institutional filters: the pre-existing legal-administrative pathway through which taxonomy authority was organized, the locus of coordination authority over taxonomy design, and the configuration of organized interests around energy and industrial transition. Each filter operates as either a critical antecedent or a juncture-period causal force, channelling shared external signals into contrasting frameworks: a statutorily anchored, environment-led, transition-oriented framework in South Korea, and an administratively anchored, finance-led, disclosure-oriented framework in Taiwan. The findings indicate that policy instruments travelling across Asia acquire different governance functions when filtered through nationally embedded institutional arrangements.