The NBG publishes Sustainable Finance Taxonomy for public consultations
The National Bank of Georgia continues developing the Sustainable Finance Framework and publishes the Sustainable Finance (SF) Taxonomy draft. The SF Taxonomy provides a classification system for identifying activities that deliver on key climate, green, social, or sustainability objectives. The primary purpose of the taxonomy is to support the development of a sustainable finance market and consequently contribute to the country’s sustainable development.
The need for developing a taxonomy for Georgia stems from various reasons. On the one hand, the lack of common definitions and classification systems has been cited as one of the main challenges for sustainable finance development. Apart from that, having a common taxonomy facilitates proper identification, assessment, and management of sustainability risks at both individual entity and system-wide levels and reduces the risk of greenwashing. On the other hand, the reasons for developing SF Taxonomy for Georgia include the need to consider specifics of the Georgian financial system, the development stage of sustainable finance, and sustainability issues relevant to Georgia.
Considering all of the above, the NBG, in cooperation with local and international experts and stakeholders, developed a SF Taxonomy for Georgia. This document is closely linked to the other steps outlined in the NBG's Sustainable Finance Roadmap and is a precondition for its successful implementation.
The SF Taxonomy adopts a broad perspective when defining the sustainable finance and thus, in addition to green finance, it also includes social finance. Green taxonomy provides a list of activities that aim to achieve environmental objectives and contribute to the development of a green economy. Social taxonomy, on the other hand, proposes a list of categories focused on achieving social objectives primarily but not exclusively for the target population. Apart from that, green/social activities that have social/green co-benefits are considered as sustainable activities.
Moreover, the NBG is working on the Regulation on Loan Classification and Reporting according to the Sustainable Finance Taxonomy (Taxonomy Regulation), which will be adopted in the near future. The Taxonomy Regulation formally defines green, social and sustainable loans and imposes reporting requirements for commercial banks on taxonomy-aligned loans. The NBG will also develop a green, social and sustainable bond framework for capital market participants based on the Taxonomy.
The SF Taxonomy draft is available at the following address - Sustainable Financing Taxonomy. Interested parties can submit suggestions, comments and questions by May 20, 2022, to the following e-mail address: email@example.com