KARACHI: Pakistan is set to launch its set of guidelines that would define the standards to classify sustainable economic activities based on their impact on climate adaptation and mitigation goals and fund them.
A meeting of the Senate Standing Committee on Climate Change and Environmental Coordination, held at the State Bank on Wednesday, was told that a draft of the ‘National Green Taxonomy’ would be launched by next month.
The European Union, one of the few regions in the world to have a taxonomy, explains it as a classification system that “defines criteria for economic activities” that are aligned with national goals of cutting carbon emissions and other environmental goals.
Simply put, it will be a checklist of requirements that a company must meet to secure climate funding. For example, a steel manufacturer will have to curb emissions from factories, prove ethical sourcing of raw material and have a plan to produce metal from recycled steel to qualify as a sustainable economic activity with minimal impact on climate.
‘National Green Taxonomy’ will set criteria to determine sustainable initiatives eligible for funding
While briefing the committee, State Bank (SBP) Governor Jameel Ahmad said the taxonomy will allow financial and non-financial companies to share a common definition of economic activities that can be considered environmentally sustainable.
He said much work on the project has been completed with technical assistance from the World Bank. It will be finalised within the next four months.
SBP Deputy Governor Saleemullah said the taxonomy would increase investment in green activity and facilitate transparency in the financial sector.
It will help regulators, financial institutions, investors and the government make “informed decisions” on funding and scaling sustainable economic activities.
The meeting was informed that Pakistan will be only the third country after Bangladesh and Sri Lanka to have a national taxonomy.
The final draft of the guidelines will be available by the first week of April, Mr Saleemullah said.
Last month, an initial draft was published on the websites of the Ministry of Climate Change and Environmental Coordination and SBP for feedback from stakeholders and the public.
While explaining the classification of sectors and economic activities in the taxonomy, Mr Saleemullah said the assessment would be done based on the sector’s contribution to the GDP, its greenhouse gas emissions and the readiness to meet the national mitigation and adaptation goal.
Based on these benchmarks, the priority sectors identified in the taxonomy are agriculture, manufacturing, transport, energy, construction, water and waste, IT, and tourism.
Senator Sherry Rehman, the chairperson of the Senate committee, suggested the involvement of provinces and local governments as the policy would require “structural changes” in the economic sector, which can’t be implemented without the support of provincial governments.
