Finance Ministry unveils draft framework of Climate Finance Taxonomy

The finance ministry Wednesday released a draft climate finance taxonomy framework that would help investors identify activities consistent with India's climate action goals and transition pathway, and facilitate greater resource flow for sustainable technologies and activities.

The framework suggests a "hybrid approach", comprising both qualitative and quantitative taxonomy aspects, be implemented in a phased manner.

It would start with setting qualitative criteria for a broad taxonomy framework that is aligned with national priorities, such as inclusive growth, net zero by 2070 target, developed India by 2047 goal and sector-specific low-carbon pathways while ensuring long-term access to reliable and affordable energy.


Subsequently, quantitative emission thresholds and benchmarks will be incorporated over time, as appropriate, as per the draft.

Taxonomy for climate finance refers to standardised regulations that would guide investors about sustainable investments. The budget had proposed the introduction of such a framework.

Where quantitative thresholds are incorporated, relative performance targets (percentage improvements) rather than absolute benchmarks would be considered.