KARACHI: In a bid to promote climate resilient and sustainable economic activities, the State Bank of Pakistan (SBP), Wednesday, instructed financial institutions to utilize the Pakistan Green Taxonomy (PGT) as a guiding framework for framing and updating their green banking policies.
The central bank’s SME, Housing and Sustainable Finance Department, in a circular issued here, stated that the government has recently introduced the PGT to promote green and sustainable economic activities.
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The Taxonomy specifies a single, common and consistent definition of “Green” across the board and provides a science-based classification system for identifying green economic activities and investments across the country, the SBP noted and advised all banks and Development Finance Institutions (DFIs) “to use PGT as a reference guide for formulating and updating their green banking policies.”
SBP has issued the PGT document, a set of Frequently Asked Questions (FAQs) and a web-based navigation tool for guidance of financial institutions in implementation.
The central bank also assured its due facilitative role through awareness sessions and other support measures in this regard.
The Pakistan Green Taxonomy provides clarity on identification of green economic activities, increases the transparency of green investments and financial products, mitigation of climate-related financial risks, and helps the financial sector direct capital flows to projects or activities aimed at achievement of the country’s environmental and climate objectives.
The framework is expected to enable financial institutions, regulators, and investors to better assess, support and scale sustainable finance initiatives, enhancing Pakistan’s sustainable finance landscape and integrating climate considerations within the country’s financial sector.
