More Stories

Informist, Wednesday, May 7, 2025

--Fin min seeks comment on draft norms on climate finance taxonomy by Jun 25
--Fin min invites comments on draft framework on climate finance taxonomy

NEW DELHI – The finance ministry Wednesday invited comments from stakeholders on Draft Framework of India's Climate Finance Taxonomy. The suggestions must be sent to Department of Economic Affairs by Jun. 25, a government release said.

"India's climate finance taxonomy will facilitate greater resource flow to climate-friendly technologies and activities, enabling India to achieve the vision of being net zero by 2070 while ensuring long-term access to reliable and affordable energy," the release said.

The aim is aligned with the Paris Agreement's goal to limit global warming to 1.5 degree Celsius above pre-industrial levels. In the near term, India has pledged to reduce its greenhouse gas emissions intensity by 45% by 2030, relative to 2005 levels.

Climate finance taxonomy is a classification system that defines and categorises economic activities based on their environmental impact, particularly in relation to climate change. It provides a framework for investors, financial institutions, and governments to identify and support activities that contribute to a low-carbon economy, while avoiding those that harm the environment. It helps ensure that funds for climate financing flow necessarily towards climate-friendly initiatives.

India is among 50 countries actively engaged in developing or have already developed climate finance taxonomies. The European Union, Canada, and South Korea have already developed such a taxonomy. Among emerging economies, China, Thailand, Indonesia, and Vietnam are some of the early movers on the taxonomy.

The Budget for 2024-25 (Apr-Mar) had first mooted taxonomy for climate finance. "We will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation. This will support achievement of the country's climate commitments and green transition," Finance Minister Nirmala Sitharaman had said in her Budget speech.

"The Climate Finance Taxonomy will serve as a tool to identify activities consistent with a country's climate action goals and transition pathway," the release said. After examining the comments, Department of Economic Affairs under Ministry of Finance will release the framework on India's Climate Finance Taxonomy.

According to the draft framework, the Indian Climate Finance Taxonomy will be based on eight principles. These include consistency with stated position on climate action and development priorities, doing no significant harm to other objectives of the climate finance taxonomy, focusing on pathways and trajectories in the country, interoperability and consistency. Supporting transition activities, promoting the use of indigenous technologies, science-based and transparent and support for micro, small, and medium enterprises are the other principles.

To begin with, the framework will consider sectors like power, mobility, and buildings. "Agriculture, food and water security will be in the context of climate adaptation and resilience building. Addressing transition, in line with country circumstances, in hard-to-abate sectors. Iron and steel and cement shall be considered at the outset." the draft said.

Once finalised, the framework document will be reviewed periodically and further additions may be brought in subsequent annexures to the framework document.  End

Reported by Sagar Sen

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.