www.b360nepal.com Open in urlscan Pro
2606:4700:3037::ac43:c7cb  Public Scan

Form analysis
1 forms found in the DOM

GET https://www.b360nepal.com/search

<form class="site-search" method="get" action="https://www.b360nepal.com/search">
  <input class="textfield" type="text" placeholder="Type here" id="keyword" name="keyword">
  <button class="button new-search" type="submit" name="">Search</button>
</form>

Text Content

Menu
 * News
   * B360 National
   * International
 * People
   * In the Lead
   * Hi5
   * Leadership
   * Innovation
   * People To Watch
 * Feature
 * Columns
   * Business Sutra
   * Legal Eagle
   * Guest Column
   * Tech Mind
   * Management Sutra
   * Governance
   * The Big Picture
   * Ringside View
   * Tech Space
   * 5 Things
   * BitsNBytes
   * Review
 * Interview
   * Face 2 Face
   * ETC
   * Opinion
 * Trade & Economics
   * Economics
   * Beed Take
   * Commodity Perspective
   * Research
 * Besides Business
   * Get Fit
   * Through the Mystic Eye
   * Top Pick
   * Books
   * Auto Focus
   * B360 Exclusive
 * Editorial Page
 * Photo Gallery
 * E-Magazines

More
 * About Us
 * Privacy Policy
 * Our Team

Follow us on

Tue, January 9, 2024 11:41:49
 * 
 * 
 * 
 * 
 * 

 * Home
 * Guest Column


GREEN TAXONOMY: WHY NEPAL SHOULD STAY AHEAD OF THE CURVE

Govind Ghimire January 3, 2024, 10:54 am
230 Shares






Madrid, Spain - 02/02/2020: Sustainable Finance Definition in ESG and
environmentally friendly investing concept. Image taken from self drafted
agreement.

Having one’s own Green Taxonomy is a wise strategic step during periods when
every country has kept the fight against climate change at the forefront.
Despite being a small developing nation, Nepal has made a firm commitment to
fight global warming together with resourceful countries. It would be a tactical
move to have a clearer naming and classification of green activities and
portfolios in place so that initiatives supporting carbon neutrality are
coordinated and segmented aligning with the global norms. 

This article aims to suggest how to set up stepping-stones on this pathway by
using a few exemplary taxonomies as a reference tool in other regions of the
world. Though there are common approaches to follow during formulating Taxonomy,
it is vital to adopt policy borrowing to use with caution and as a study
material because Nepal faces unique and varying challenges due to its divergent
topography and biodiversity.

Concept & Evolution of Green Taxonomy

A ‘Green Taxonomy’ is a classification system used to categorise and
characterise environmentally sustainable economic activities and investments. It
is used to assist investors, businesses, and policymakers in identifying and
promoting activities that have a sustainable impact. Green taxonomies seek to
provide clarity and transparency about what qualifies as green or
environmentally friendly. It helps investors and financial institutions with
clear recommendations on ecologically sustainable projects and businesses to
deploy funding to projects and assets that match long-term development goals as
well as prevents ‘greenwashing,’ It promotes pollution avoidance, biodiversity
preservation, circular economy principles, and sustainable use of marine and
freshwater resources, also incorporated in the UN’s SDGs and the Paris
Agreement.

With an emphasis on the preservation of natural resources and the battle against
pollution, it first took shape in the middle of the 20th century with the
emergence of environmental movements. Socially responsible investing (SRI)
thought emerged in the 1960s when investors started considering social and
environmental implications in addition to financial returns. To help governments
assess and lessen the environmental effects of significant projects,
environmental impact assessments, or EIAs, became essential in the 1970s. The
Kyoto Protocol in 1997 raised awareness of the necessity for financing clean
energy and low-carbon technology on a worldwide scale. Green finance norms, such
as the Equator Principles, began to take shape in the 2000s. The European
Union’s Green Taxonomy Regulation, which established standards for
environmentally friendly economic activity across sectors, marked a turning
point, nevertheless, in 2021.

International Landscapes of Green Taxonomy

One of the most preferred and commonly referred to green taxonomy frameworks in
the world is the European Union’s Taxonomy Regulation, which came into force in
July 2021. It keeps six main goals related to the environment in the centre such
as climate change adaptation, climate change mitigation, sustainable use and
protection of water and marine resources, transition to a circular economy,
pollution prevention and control, and preservation and reconstruction of
biodiversity and ecosystems. 

It encourages investments in eco-friendly ventures, lessens the practice of
greenwashing, directs investment decisions, and advances, wider policy goals -
all of which contribute to the promotion of sustainability. It has also
established a global standard for green taxonomy, giving rise to debates across
the globe. Its mandatory implementation will need to take some review due to its
complexity and associated expenses.

The United States has made significant progress in sustainable finance and
voluntary ESG disclosure while lacking a full national green taxonomy similar to
that of the European Union. Regulatory agencies in the US, such as the SEC, are
investigating methods to standardise ESG reporting.

Likewise, the Green Technical Advisory Group (GTAG) has recommended the UK Green
Taxonomy, which attempts to categorise environmentally friendly activities to
improve comprehension of the environmental impact. GTAG recommends that the
government establish a clear, believable, and practical taxonomy. Similarly,
China has been pushing forward with its sustainable finance projects and green
taxonomy to coordinate financial operations with environmental and
sustainability objectives. The Belt and Road Initiative now incorporates green
finance principles. The China Securities Regulatory Commission has developed a
green securities classification system. India has also demonstrated significant
progress in sustainable financing, as seen by its active involvement in the
green bond market across multiple industries, including water conservation,
sustainable transportation, and renewable energy. Transparency in the financial
sector has been strengthened in India by regulatory agencies like the Securities
and Exchange Board of India (SEBI), which has enforced ESG-related disclosures.
To encourage further ethical behaviour, the Reserve Bank of India (RBI) released
guidelines for loans tied to sustainability and green bonds.

Current Initiatives & Aids of having country-specific Taxonomy

Nepal has been making great progress in encouraging sustainability and
ecologically friendly practices. The nation’s dedication to environmental
preservation, renewable energy, and climate resilience is strongly linked to a
commitment to sustainability and going net zero by 2045, even though the
creation and use of a thorough green taxonomy are still in infancy.

Nepal is aggressively looking for ways to use its plentiful water resources for
the production of clean energy, especially through hydropower projects. This
programme supports the nation’s objective of lowering its carbon footprint and
switching to a more environmentally friendly energy mix.

Nepal’s green financing programmes also heavily depend on sustainable
agriculture techniques. The nation is attempting to encourage ecologically
conscious farming methods to reduce agriculture’s negative effects on the
environment while maintaining food security. In addition, rules for
Environmental Social Risk Management (ESRM) have been introduced by Nepal Rastra
Bank.

The adoption of green taxonomy in Nepal is highly relevant because of Nepal’s
unmatched water resources, dense forest, fertile land, mountainous topography,
and biodiversity. Nepal is also extremely vulnerable to the effects of climate
change, such as altered precipitation patterns and glacial melt. A green
taxonomy helps to ensure agricultural output securing food and health safety
that enhances the long-term viability of the agricultural economy. It can be
instrumental in raising financial resources through green bonds, and green
climate borrowings and can have access to green climate funds, etc. Nepal can
take a lead role in the international platform due to its credible stand on
carbon-neutral initiatives earlier even than developed nations.  By putting
green taxonomy into practice, the nation can better identify and finance
climate-resilient projects, like building infrastructure to prevent flooding in
high-risk locations. Furthermore, Nepal can improve its international
recognition and draw in more tourists by adhering to international
sustainability standards.

Major Challenges for Nepal

In Nepal, creating a green taxonomy is fraught with difficult obstacles. Because
of its Himalayan terrain, Nepal has unique climate change issues that need a
customised strategy while developing its green taxonomy. Resilience-building
measures should be prioritised due to the nation’s susceptibility to landslides,
glacier melt, and changing precipitation patterns. Furthermore, the taxonomy’s
emphasis on river, lake, and glacier protection underscores the significance of
sustainable water resource management in Nepal. The nation needs to address
problems with data availability and quality, as well as create a legal framework
that complies with global norms while taking into account its particular
circumstances.

To make sure that financial institutions and government bodies are prepared to
use and oversee the concepts of the green taxonomy, capacity-building
initiatives are required. For a taxonomy that is inclusive, transparent, and
widely accepted, it is essential to involve a wide range of stakeholders,
including corporations, civil society, and academics.

Furthermore, because of Nepal’s interconnectivity of economic activities, which
include manufacturing, services, and agriculture, it might be challenging to
classify certain activities as green or non-green. Given Nepal’s sensitivity to
climate change and reliance on natural resources, the taxonomy has to be
modified to take into account the cons when handling the transition to a green
economy. Nepal must also look into issues including financial accessibility,
oversight, enforcement procedures, and fiscal constraints. Making sure its
taxonomy complies with international norms while handling geopolitical and
regulatory issues is another challenge.

Scope and Coverage of Green Taxonomy

The process of creating and executing a green taxonomy legal framework is
intricate and necessitates giving considerable thought to Nepal’s unique
requirements. To make it effective in promoting environmental sustainability
while simultaneously supporting economic growth, the government, civil society,
and the business sector should work together. Building the ability of financial
institutions, regulators, and companies to understand and successfully apply the
concepts of green taxonomy is one of the most important factors in the
successful implementation of green taxonomy in Nepal. It might be advantageous
to broaden the taxonomy gradually to cover more economic and business
activities.

A complete Green Taxonomy should cover aspects such as Definition and Scope,
regulatory authority, stakeholder engagement, data and metrics, and disclosure
requirements. Other issues and areas that need to be included in Green Taxonomy
are categorisation and accreditation, incentives and penalties, monitoring and
reporting, capacity building, enforcement and legal recourse, adaptability and
review, and coordination with other policies.

For several reasons, Green Taxonomy reporting is supposed to be coordinated with
Taskforce on Climate-related Financial Disclosures (TCFD) reporting. This
alignment removes uncertainty caused by disparate reporting requirements and
streamlines the reporting environment, relieving pressure on businesses that are
already familiar with TCFD principles. The Green Taxonomy’s connection with TCFD
reporting promotes sustainability integration across regulatory agencies and
enterprises while also improving transparency.

Voluntary to Compulsory Adoption

For several important reasons, a developing nation like Nepal must gradually
implement a green taxonomy. It makes it possible and easier for old,
resource-intensive businesses to transition economically to a more eco-friendly
and sustainable economy. A gradual strategy minimises employment losses and
economic shocks by preventing abrupt disruptions in conventional sectors, which
can be a complex transition. Adoption that happens gradually promotes the growth
of essential skills and abilities.

Building capacity over time can guarantee that firms, financial institutions,
and government authorities are ready to comprehend and apply green taxonomy in
their operations. A gradual approach considers risk management, stakeholder
participation, resource restrictions, and social factors. It also makes it
possible to tailor green financing and investment criteria to the unique
economic and environmental difficulties that developing nations like Nepal face.
A more robust and sustainable route toward a greener economy is made possible by
gradual acceptance.

In the context of sustainable finance and investing practices, the words
‘voluntary adoption of green taxonomy’ and ‘compulsory adoption of green
taxonomy’ refer to the application of a green taxonomy framework. When a
corporation or financial institution decides to employ a green taxonomy
framework on its initiative, it is a voluntary adoption. They see benefit in
applying the green taxonomy’s ideas and criteria to their investment plans,
reporting procedures, and decision-making processes. When a government or
regulatory body requires the use of a green taxonomy framework for a certain set
of financial activities or reporting, this is referred to as compulsory
adoption. It ensures compliance with the green taxonomy standards and principles
mandated by law or regulation for enterprises and businesses.

The decision between mandatory and voluntary adoption is often influenced by the
goals of a government’s policies as well as the aim to promote sustainable
investment and finance practices more broadly. While the two strategies seek to
promote environmentally conscious business practices, they diverge in
implementation and reach

Having our green taxonomy cannot be avoided for long. Thus, every stakeholder,
from the line ministry to other government agencies, the central bank, umbrella
organisations, and business communities, must collaborate to formulate a
workable, usable, and relevant taxonomy that can serve as a guiding principle
for Nepal’s future efforts to achieve economic and environmental sustainability.

 

Published Date: January 3, 2024, 10:54 am
Post Comment

Green Taxonomy climate change Nepal ecologically sustainable projects investors
financial institutions environmental movements Socially responsible investing
SRI European Union’s Taxonomy Regulation
Govind Ghimire
E-Magazine


CLICK HERE TO READ FULL ISSUE

RELATED Guest Column
Guest Column


GREEN TAXONOMY: WHY NEPAL SHOULD STAY AHEAD OF THE CURVE

January 3, 2024
Business 360° is a magazine that delivers on quality business news content,
profiles of entrepreneurs and leaders, features on issues that matter, articles
that assess and analyze policy and delivery mechanisms in the world of trade and
commerce

Quick Links
 * News
 * People
 * Feature
 * Columns
 * Interview
 * Trade & Economics
 * Besides Business
 * Editorial Page
 * Photo Gallery
 * 360 Scrutiny

More
 * About Us
 * Latest News
 * E-Magazines
 * Our Team

Contact Address
 * R.R Building Naxal, Narayan Chaur, Kathmandu Nepal
 * +977 1 4510440, 4526655
 * helpdesk@media9.com.np


© 2024 BUSINESS 360°. ALL RIGHTS RESERVED. SITE BY: SOFTNEP



Quick Inqiury

Search



PRIVACY POLICY

Testimonials

Log In

Register