Context
The RBI and the Finance Ministry should be inspired from the developing world, particularly the ASEAN region, where a layered green taxonomy as a living document keeps getting updated with sectoral views of possible sustainable trajectories.
Key Highlights
- A green taxonomy is a framework for outlining what can be called environmentally sustainable investments.
- It is a classification system that defines which monetary activities and assets are “green” or environmentally sustainable.
- It is a significant tool and has several complementary purposes:
- assist prevent greenwashing;
- help buyers make knowledgeable funding selections; and
- channel funding towards sustainable or green financial activities and adopting green assets.
- Structurally, all taxonomies are similar. So in some way, they all include the goals of climate mitigation and variation and some additionally include other environmental objectives along with biodiversity conservation, as an example.
- To be considered green, an pastime have to considerably make contributions to at least one of the environmental goals.
- Often, taxonomies also consist of “do no significant harm” standards (i.e. an interest that substantially contributes to at least one environmental goal need to no longer harm any other environmental goal) and social safeguards (i.e., compliance with human rights).
- Some taxonomies best outline what’s inexperienced and others, along with the these days launched Indonesian taxonomy or the proposed Singaporean taxonomy, use a “visitors light” method, in which the economic sports are break up into one-of-a-kind categories (i.e. green, amber, or red) to classify their environmental sustainability.
What is Greenwashing?
- It is the process of conveying a false impression or misleading records about how a company’s products are environmentally sustainable.
- It entails making an unsubstantiated claim to mislead clients into believing that a company’s products are environmentally friendly or have a greater positive environmental impact than they actually do.
- In addition, greenwashing can also arise when a company attempts to emphasise sustainable aspects of a product to overshadow its involvement in environmentally negative practices.
- Companies also can greenwash projects with vague claims that don’t offer actual records or clinical validation for the claims.
Source: The Hindu
UPSC Mains Practice Question
Q.Explain the purpose of the Green Grid Initiative launched at the World Leaders Summit of the COP26 UN Climate Change Conference in Glasgow in November 2021. When was this idea first floated in the International Solar Alliance (ISA)? (2021)
.png)
