Objective
Directing financial flows towards sustainable economic activities and supporting the transition to a green economy.
Description
The National Bank of Georgia's (NBG) Green Taxonomy was adopted as part of Georgia's Sustainable Finance Taxonomy (SFT). The National Bank of Georgia (NBG) is the lead institution, having spearheaded the development of the SFT. This instrument falls within the areas of sustainable finance, green finance, environmental governance, and banking regulation. The Green Taxonomy constitutes the environmental pillar of the SFT and is part of the NBG's Sustainable Finance Framework, which is structured around four pillars: capacity building and awareness; sustainable finance flows; ESG risk management; and transparency and market discipline. The Green Taxonomy provides a classification system for identifying environmentally sustainable economic activities and establishes common criteria for determining which activities qualify as green. It aims to provide standardized definitions and classifications, enable monitoring and reporting of green finance, support ESG risk management, improve consistency and comparability of published information, identify sustainable investment opportunities, strengthen investor confidence and reduce the risks of greenwashing.
The Green Taxonomy covers 11 sectors: renewable energy, energy efficiency, waste management, sustainable water management, pollution prevention and control, green transport, sustainable agriculture, livestock and aquaculture, biodiversity conservation, sustainable buildings and construction, sustainable production and trade, and green services. The agriculture sector includes sustainable agriculture and livestock farming, with organic perennial crop cultivation, organic non-perennial crop cultivation, sustainable livestock products, sustainable livestock farming, sustainable textile processing and production, and climate-smart agriculture, as well as fisheries and aquaculture, with sustainable fisheries and aquaculture. For organic perennial crops, organic non-perennial crops, products from sustainable livestock farming, sustainable livestock farming, sustainable textile processing and production, and sustainable fishing and aquaculture, eligibility requires an organic certificate issued by accredited national or international bodies, such as CaucasCert or EuroCert. For climate-smart agriculture, eligibility is based on alignment with climate-smart agricultural practices such as precision agriculture, agroclimatic information systems, improved irrigation systems, post-harvest storage facilities, sustainable soil and land management, resilient seeds, pest and disease management, and minimum-till or no-till technologies.
The taxonomy is primarily intended for commercial banks, microfinance institutions, capital market participants, including bond issuers and investors, and certification and verification bodies. The NBG adopted the Regulations on the Classification and Reporting of Loans in accordance with the Sustainable Finance Taxonomy in July 2022, which entered into force on January 1, 2023. Commercial banks are required to classify loans aligned with the taxonomy according to NBG criteria, submit monthly reports on green loans, and provide, upon request, documentation justifying their alignment with the taxonomy. The NBG conducts periodic assessments of reported green loans and reviews supporting documentation to verify compliance with the taxonomy requirements. The development process involved the Ministry of Environmental Protection and Agriculture, the Ministry of Economy and Sustainable Development, the Sustainable Finance Working Group, commercial banks, the Green for Growth Fund (GGF), MACS Energy & Water, PwC Czech Republic and Georgia, the IFC, the World Bank, the SBFN, and other international partners.
Country
Georgia
Ladder
National → Local
Nature
Financial
In which law/program is this instrument included?
Regulatory and classification
Taxonomy development process
Field data indicates that the development process was strongly coordinated by the National Bank of Georgia (NBG), which acted as the central institution responsible for initiating, coordinating, and overseeing the development of the sustainable finance taxonomy. Interviews show that stakeholder participation was organized through an iterative consultation process involving commercial banks, members of the Sustainable Finance Working Group, sectoral ministries, local technical experts, and international organizations. Interviewees emphasized that commercial banks participated throughout the drafting process, providing feedback on the proposed categories, the technical selection criteria, and the practical challenges of implementation. These contributions were gathered through group meetings, online consultations, face-to-face discussions, and written submissions. The interview data also indicate that implementation issues were addressed from the earliest stages of drafting, with commercial banks' operational departments involved alongside sustainability teams. Interviewees consistently described the taxonomy development process as collaborative and iterative, involving several successive rounds of consultation between NBG and market participants. NBG nevertheless retained final decision-making authority regarding the taxonomy.
Chronology of the instrument
The Directory of Researchers of the Instrument
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Ninaka Berdzenishvili
Fieldwork in Georgia and the United Kingdom (WP2 & WP3) | PhD Candidate, Paul-Valéry University Montpellier 3 / CIRAD
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Nikoloz Kachakhidze
Fieldwork in Georgia | Research Intern, CIRAD | Master's Student, Caucasus University
