To help financial institutions identify and invest in sectors that can be considered sustainable, the government has decided to evolve a taxonomy for climate finance
The government plans to establish a taxonomy for categorising climate finance to enhance the availability of funds for addressing climate change impacts and reducing greenhouse gas emissions. Union Finance Minister Nirmala Sitharaman announced this in her Budget speech in New Delhi on July 23.
A taxonomy that clearly defines the sustainable parts of the economy maximises the efficiency of investments by ensuring that funds are directed towards genuine green projects. Such a move can help drive innovation and support climate goals.
The minister emphasised that this initiative will spur the nation's strides towards transitioning to greener practices. Also on the drawing board is a roadmap to help the green transition of hard-to-abate sectors, such as shipping, aviation, iron and steel, and chemicals, from energy efficiency targets to emission reduction targets.