Draft Climate Finance Taxonomy Framework

The Finance Ministry has released a draft framework aimed at guiding investors towards activities that align with India's climate action goals and transition pathway. This framework seeks to enhance resource flow towards sustainable technologies and activities.

Framework Approach

• The framework proposes a “hybrid approach” combining both qualitative and quantitative aspects.
• Implementation is to be done in a phased manner.

Qualitative Criteria

• Initial focus on setting qualitative criteria for a broad taxonomy framework.
• Alignment with national priorities such as: 
  • Inclusive growth
  • Net zero by 2070 target
  • Developed India by 2047 goal
  • Sector-specific low-carbon pathways
• Emphasis on long-term access to reliable and affordable energy.

Quantitative Criteria

• Incorporation of quantitative emission thresholds and benchmarks over time as appropriate.
• Use of relative performance targets (percentage improvements) rather than absolute benchmarks when setting thresholds.

Purpose and Impact

• Taxonomy for climate finance refers to standardized regulations guiding sustainable investments.
• The framework is designed to facilitate greater investment in sustainable technologies, aligning with the national climate and development goals.