Sustainable finance has become a vital component of Malaysia's economic development plan. This can be witnessed by initiatives like the Securities Commission Malaysia's Sustainable and Responsible Investment (SRI) Sukuk Framework and Bank Negara Malaysia's Climate Change and Principle-based Taxonomy (CCPT). While these standards show that Malaysia's government is committed concerning sustainable financing, the sector remains at vulnerable to greenwashing, the act of exaggerating or misrepresenting environmental qualifications. This conceptual paper examines how a comprehensive sustainable finance taxonomy might function as a crucial tool to protect market integrity, bolster investor trust, and foster authentic green growth. Based on signalling theory and stakeholder theory, the paper formulates a conceptual framework that regards taxonomy as both a regulatory tool and a market indicator to reduce greenwashing concerns. The proposed framework delineates three fundamental functions of an effective taxonomy: (1) classification and standardization, which guarantee consistency and comparability among green financial instruments; (2) verification and accountability, which enhance transparency and disclosure practices; and (3) market alignment, which bolsters investor trust and directs capital toward genuine sustainable projects. The proposed framework establishes a basis for forthcoming empirical research and practical policy measures intended to promote sustainable development via reliable green finance.