Nepal Rastra Bank (NRB) has launched the Nepal Green Finance Taxonomy 2024 to promote investments aimed at mitigating climate change, improving climate adaptation and resilience, and fostering a sustainable economy. The new policy encourages banks to prioritize lending for green projects that support sustainable development, reduce the effects of climate change, and protect the environment.
Development partner financial institutions have already been implementing climate adaptation and green economy standards in their investments. In line with this, NRB had committed to introducing the green finance taxonomy policy in last year's monetary policy. After releasing the draft earlier in January this year and gathering feedback from stakeholders, the central bank has finalized and implemented the policy as of Monday.
The policy classifies industries into three categories: green, amber, and red. Banks are encouraged to prioritize investments in green activities, which include industries with zero carbon emissions. Investments in amber (yellow) activities, involving low carbon emissions, require careful evaluation, while investment in red activities, which have high carbon emissions, is discouraged. This classification aims to guide banks toward sustainable investments and reduce carbon footprints across industries.
