Build Inclusive Green Financial Flows

Home » Taxonomy

What is it about?

Taxonomy

Papua New Guinea’s Inclusive and Green Taxonomy (hereafter referred to as the “taxonomy”) is a classification system of green financial flows. It is designed for investors, lenders, and other financial sector participants to identify, monitor, and demonstrate – through quantitative metrics – the scope and volume of their inclusive and green financial flows, whether it is in the form of a loan, equity, guarantee, or some other financial instrument.

Providing financial institutions, businesses, citizens, policymakers, and other stakeholders with a common understanding of and a system to identify, develop, and finance inclusive and green activities.
Fostering credible and standardized Sustainability Disclosure Requirements and mitigating the risk of “greenwashing”.
Boosting inclusive and green finance flows from various sources, including the domestic private sector, international financial institutions, and foreign investors.
Tracking private sector investments and loans in inclusive and/or green projects and measuring the impact on PNG’s inclusive and green development and climate change-related policies and targets.
Minimizing the challenges in identifying and implementing an evaluation framework/system to assess whether economic activities and enterprises are promoting initiatives to reduce carbon emissions.

Supporting PNG in meeting its climate mitigation and adaptation goals – for example, tracking the volume of climate finance that contributes to the achievement of its Nationally Determined Contribution (NDC).
Providing the financial sector with clarity and certainty in selecting green and/or inclusive investments in line with international best practices and PNG’s national priorities, policies, and standards.
Attracting additional foreign capital for climate-friendly and inclusive/green investment in PNG by increasing the credibility and transparency of green activities.
Facilitating the reporting and management of environmental and social performance, thereby contributing to the reduction of financial, climate, and systemic risks.
Supporting regulatory and supervisory oversight of the financial sector.
Reducing the costs associated with labelling and issuing a green financial instrument.

Objectives

For economic activity to be considered environmentally sustainable, it must comply with all four of the following criteria:

Green / Blue Initiatives

Inclusive lending ($2m available to kick off)

Good Practice sharing among Central Banks and Financial Institutions

Private Sector Involvement

Reporting / Compliance

the igfp

Principles

The following principles were also considered and followed while drafting the IGFP:

Contribute to national policies and targets.

The taxonomy should contribute to the key inclusive and/or environmental targets in PNG’s policies, strategies, and programs, and the subsequent revisions to the taxonomy should respect PNG’s sustainable development priorities.

Cover priority economic sectors.

The taxonomy should cover the identified priority NAP sectors and contribute to the transition of key economic sectors into sustainable ones.

Comply with ESG standards.

The taxonomy must comply with minimum international environmental, social, governance, and risk management regulations and standards.

Address and make a significant contribution(s) to addressing environmental challenges and promoting inclusive growth.

PNG’s key environmental and climate risk challenges should be addressed while ensuring the inclusion of marginalized groups in the country’s economic growth.

Align with international standards and good practices.

The taxonomy should reference and align with compatible international standards and practices.

Iterative, dynamic, and continuous review and development.

The taxonomy should reference and align with compatible international standards and practices.