Karachi, December 10, 2025 – The State Bank of Pakistan (SBP) on Wednesday advised all banks and development finance institutions (DFIs) to adopt green banking policies aligned with the Pakistan Green Taxonomy (PGT). The move aims to promote sustainable economic activities and direct investments toward environmentally responsible sectors.
In a circular, the SBP stated that the PGT provides a science-based classification system for identifying green economic activities, offering a unified definition of “green” for financial institutions across Pakistan. Banks and DFIs are encouraged to use the PGT as a reference when formulating or updating their green banking policies. SBP will support institutions through awareness programs and facilitation initiatives.
A green taxonomy serves as a framework to classify activities that substantially contribute to national environmental goals, including climate change mitigation and adaptation, sustainable water use, ecosystem protection, pollution control, circular economy promotion, and sustainable land management.
The 2025 edition of the PGT covers multiple sectors, including manufacturing, transport, energy, construction, waste management, ICT, tourism, agriculture, forestry, fishing, and aquaculture. It identifies 55 mitigation activities, 77 adaptation measures, and seven tourism investment categories, using a traffic light system to classify them as green (sustainable), amber (transition), or red (ineligible). Activities must meet Do No Significant Harm (DNSH) criteria and minimum social safeguards to qualify as environmentally sustainable.
The PGT is locally relevant yet internationally benchmarked, developed in line with World Bank recommendations and adapted to Pakistan’s context. It is a dynamic framework, expected to be revised periodically to reflect changes in environmental priorities, technology availability, and sectoral needs.
SBP emphasized that adopting green banking policies is crucial for Pakistan’s climate resilience, sustainable development, and long-term economic growth. The taxonomy ensures financial flows are directed toward activities that contribute meaningfully to the country’s environmental and climate objectives.