Govt Issues Draft Climate Finance Taxonomy To Curb Greenwashing

Climate Finance Still A Challenge For Developing Countries Amid RE Push

India’s Department of Economic Affairs under the Ministry of Finance has issued a draft framework for the country’s Climate Finance Taxonomy and invited public and expert feedback by June 25, 2025. The draft framework will be the basis for developing sectoral annexures to outline the measures, activities, and projects considered climate-supportive, and those identified for promoting the transition.

The taxonomy is intended to increase the flow of resources to climate-friendly technologies and activities, enabling India to meet its target of net zero emissions by 2070, while ensuring long-term access to reliable and affordable energy. A key objective is to prevent greenwashing, which refers to the misrepresentation—either intentional or due to gross negligence—of activities as climate-aligned.

In their Union Budget 2024-25, the Union Minister, for Finance and Corporate Affairs, announced, “We will develop a taxonomy for climate finance for enhancing the availability of capital for climate adaptation and mitigation. This will support the achievement of the country’s climate commitments and green transition”

Advancing Diversified Energy Mix

According to the report, India is progressing towards a diversified energy mix, focusing on expanding renewable
energy among other forms of renewable energy. A Draft Framework of the Climate Finance Taxonomy has been developed according to this announcement.

This framework outlines the approach, objectives, and principles that will guide the taxonomy. It also details the methodology for classifying activities, projects, and measures that contribute to India’s climate commitments, while also taking into account goals associated with achieving Viksit Bharat by 2047. 

Comments may be emailed to aditi.pathak[at]gov[dot]in by 25th June 2025 with the Subject “Comments on the Draft Framework for the Taxonomy”. The comments received through public consultation will be duly considered and examined, following which the Department of Economic Affairs, Ministry of Finance, will release the Framework of India’s Climate Finance Taxonomy