Central bank prepares ‘Nepal Green Finance Taxonomy’ amid global climate change concerns

KATHMANDU: In response to the escalating global climate change crisis, the Nepal Rastra Bank has initiated the formulation of a ‘Nepal Green Finance Taxonomy,’ seeking recommendations from stakeholders. The central bank aims to present proposals within the next two months, urging all concerned parties to participate in the discourse.

Nepal, recognizing the impact of climate change on Earth and human health, has committed to a zero-carbon emission policy by 2045. In alignment with this commitment, the central bank is actively preparing a financial investment model within the framework of the ‘Green Economy.’

The recent economic paradigm shift towards ‘Green, Amber, and Red’ sectors, as highlighted in the report, emphasizes incentivizing investment in the green sector.

Dr. Gunakar Bhatta, the spokesperson for Nepal’s central bank, disclosed that special encouragement will be provided for banking and financial institutions investing in the green sector, ensuring ease and priority in their operations.

Dr. Bhatta also mentioned that the central bank has studied the global demand for such initiatives, with international organizations like the World Bank supporting Nepal’s efforts to channelize funds into green and sustainable projects.

The spokesperson further stressed the need for internal financial resources to be directed towards climate-friendly investments and models, citing the establishment of a ‘Green Finance Taxonomy’ as a pivotal step in achieving this objective.

The central bank’s spokesperson reiterated the importance of aligning investments in various economic sectors such as agriculture and food security, forestry and environment, water resources and energy, industry, transportation, storage, construction, mining, production, and environmental management, to minimize carbon emissions. The central bank is committed to formulating policies that encourage investments in projects promoting sustainability and green development.

With international funding based on the premise of Nepal raising 40 billion rupees by 2030, the central bank envisions utilizing internal financial resources to foster a green and resilient economy. The focus on green finance will not only contribute to national economic growth but also address global concerns about climate change, Dr. Bhatta highlighted.