SBP directs Banks, DFIs to align green banking Policies

December 10, 2025 (MLN): The State Bank of Pakistan (SBP) has instructed all banks and development finance institutions (DFIs) to adopt the newly notified Pakistan Green Taxonomy (PGT) as a guiding framework for developing and updating their green banking policies.

According to a circular issued today, the government has formally introduced the PGT to promote green and sustainable economic activities.

The taxonomy provides a science-based, uniform classification system for identifying environmentally responsible economic activities and investments across Pakistan.

SBP noted that the framework will help establish a single, consistent definition of “green”, enabling financial institutions, regulators, and investors to better assess, support, and scale sustainable finance initiatives.

The central bank stated that it will continue to play a facilitative role by conducting awareness sessions and extending technical support to the industry.

SBP has also shared the PGT document, a set of Frequently Asked Questions (FAQs), and a web-based navigation tool as annexures to guide financial institutions in implementation.

The directive marks a key step toward enhancing Pakistan’s sustainable finance landscape and integrating climate considerations within the country’s financial sector.

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