Nepal Rastra Bank (NRB) Executive Director Guru Prasad Paudel has called on the government to grant official national recognition to the National Green Finance Taxonomy, emphasizing its importance in mobilizing international climate finance and concessional funding.

Speaking at a program in Kathmandu, Paudel stated that formal recognition of the taxonomy would strengthen Nepal's ability to access global climate funds and attract long-term green investments.

NRB had previously introduced the Environmental and Social Risk Management Guideline in 2018 and later implemented the Green Finance Taxonomy as a reference framework for banks and financial institutions in October 2024.

According to Paudel, although NRB's Board of Directors has formally requested the Government of Nepal to recognize the taxonomy as a national document, the approval process has yet to be completed.

He explained that the Green Finance Taxonomy is not intended solely for banks and financial institutions but serves as a guiding framework for the entire financial ecosystem, including the capital market, insurance sector, and other economic activities.

The framework classifies economic activities into three categories—Green, Amber, and Red—based on their environmental impact and sustainability standards.

Paudel stressed that investment in a particular sector does not automatically qualify as green finance. Using agriculture as an example, he noted that agricultural lending can only be considered green if environmentally responsible practices, proper fertilizer management, and sustainable production methods are adopted.

He further stated that once the taxonomy receives national recognition, Nepal will be better positioned to align its standards with international green finance frameworks.

Such alignment could improve the country's eligibility for Green Bonds, international climate funds, and various financing mechanisms established under the Paris Agreement, enabling Nepal to secure grants and concessional long-term funding for sustainable development projects.

Paudel also highlighted Nepal's geographical vulnerability to climate change and stressed the need to prioritize climate-related considerations in sectors where the country holds competitive advantages.

According to him, the Green Finance Taxonomy can serve as a milestone in helping Nepal fulfill its international climate commitments while accelerating the transition toward a green and sustainable economy.