SBP releases draft national green taxonomy to spur green projects

KARACHI: Pakistan’s central bank on Tuesday unveiled a draft national green taxonomy, calling for public feedback on it to promote green finance in the country, a statement said.

The taxonomy has been developed in collaboration with the Ministry of Climate Change and Environmental Coordination with technical assistance from the World Bank.The taxonomy provides clear definitions of green projects and activities, enabling policymakers, banks, financial institutions and investors to increase capital flows to the sectors for climate risk mitigation and adaptation, according to the State Bank of Pakistan (SBP).

The taxonomy will also provide clarity to financial markets about green projects and activities, increase transparency in green investments and financial products, mitigate climate-related financial risks, and help the financial sector direct capital flows to projects or activities that will meet the country’s environmental and climate objectives, it said.

To ensure that the taxonomy reflects a holistic view of all market players, the draft taxonomy has been uploaded on the SBP official website for public consultation. The consultation period will be open from February 04-18, 2025 (two weeks). For ease of understanding, a set of frequently asked questions is also available alongside the draft document.

The SBP encourages all the stakeholders, including environment professionals, banks and the people to share their valuable feedback on the draft taxonomy, enabling it to issue and roll out the finalised taxonomy according to plan.