The State Bank of Pakistan (SBP) has instructed all financial institutions to use the newly introduced Pakistan Green Taxonomy (PGT) as the guiding framework for designing and updating their green banking policies, aiming to boost climate-resilient and environmentally sustainable economic activities.
In a circular, the SBP’s SME, Housing and Sustainable Finance Department said the government had launched the PGT to provide a unified, science-based classification system for identifying green economic activities and investments across the country. The taxonomy establishes a single and consistent definition of “green,” enabling financial institutions to assess and support environmentally aligned projects with greater clarity.
The SBP advised all banks and Development Finance Institutions (DFIs) to reference the PGT when formulating or revising their green banking policies. To facilitate implementation, the central bank has also released the full taxonomy document, a set of FAQs, and a web-based navigation tool.
The SBP said it would continue to play a supporting role through awareness sessions and additional facilitative measures as institutions transition to the new framework.
According to the central bank, the PGT enhances transparency in green investments and financial products, helps mitigate climate-related financial risks, and guides capital flows toward projects that advance Pakistan’s environmental and climate objectives.
The taxonomy is expected to strengthen the country’s sustainable finance ecosystem by enabling regulators, investors and financial institutions to better assess, scale and support green initiatives.
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