# What Is the Pakistan Green Taxonomy, and How Does It Affect Business Loans?

Canonical: https://senseible.earth/climate-intelligence/pakistan-green-taxonomy

Published 2026-10-13.

When a Pakistani bank calls a loan green, it now needs a reason it can point to. That reason is the Pakistan Green Taxonomy: a national list of activities that count as environmentally sustainable, with the criteria they must meet. For a business owner hoping to finance solar, efficiency or cleaner production, it is the rulebook the bank will read your project against.

## What it is

The taxonomy was developed by the Ministry of Climate Change and Environmental Coordination, with the Ministry of Finance, the State Bank of Pakistan and the World Bank, and approved by the Economic Coordination Committee. A draft circulated in January 2025.

The State Bank has advised all banks and development finance institutions to reference it when writing or revising their green banking policies, and has published the full document, a set of FAQs and a web-based navigation tool.

## Why it matters now

Until mid-2024, the easiest green loan in Pakistan came through the State Bank's renewable energy refinancing scheme. That scheme is listed as discontinued from 1 July 2024. Since then, green lending has moved into banks' ordinary credit processes, judged against their own green policies, which the taxonomy now anchors.

Green banking is still developing. A professional accountants' brief reported that 79 percent of banks had adopted green policies and 69 percent integrated environmental and social risk into lending.

## How a bank uses it on your loan

1. **Classification:** the bank checks whether your project matches an activity in the taxonomy, such as renewable energy, energy efficiency or pollution control.
2. **Criteria:** it checks the project against the technical criteria for that activity.
3. **Evidence:** it asks for documents that show the project meets them, before and after.
4. **Reporting:** it reports its green lending, so it will ask you for results during the loan.

## How to use it in your application

- **Find your activity in the navigation tool** and use its wording in your proposal.
- **Show the baseline:** twelve months of electricity and fuel bills, in units.
- **Show the expected result** and how you will measure it after installation.
- **Keep reporting:** the evidence that won the loan is also what keeps it classified as green.

Senseible turns bills and invoices into a monthly energy and emissions record linked to each source document, the evidence a bank needs for classification and reporting. For worked examples, see [green loan for a textile business in Karachi](https://senseible.earth/climate-intelligence/green-loan-textile-business-karachi) and [green loan for a cement plant in Pakistan](https://senseible.earth/climate-intelligence/green-loan-cement-plant-pakistan).

Check the State Bank's taxonomy documents and your bank's green policy before you apply.

## Related guides

- [what banks finance with green deposits](https://senseible.earth/climate-intelligence/rbi-green-deposits-what-banks-finance)
- [financing CBAM compliance for steel exporters in Vietnam](https://senseible.earth/climate-intelligence/finance-cbam-compliance-steel-vietnam)
- [green loan for a textile business in Karachi](https://senseible.earth/climate-intelligence/green-loan-textile-business-karachi)
- [green loan for a cement plant in Pakistan](https://senseible.earth/climate-intelligence/green-loan-cement-plant-pakistan)