Central Bank of Azerbaijan unveils preliminary green taxonomy example

The Central Bank of Azerbaijan (CBA) has developed a preliminary example of a "green taxonomy," Azernews reports that ?ahin Mahmudzade, CEO of the CBA, told in an update to the "Economy of Azerbaijan" Telegram channel.

Mahmudzade detailed that the taxonomy, tailored to the characteristics of Azerbaijan's economy, underwent extensive analysis and research based on international practices. He explained, "For the taxonomy prepared taking into account the characteristics of the country's economy, we conducted deep analyses and research on international practices. In the current example, either bonds or loans aimed at 'green areas' are considered 'green investment' according to the classification. After the taxonomy is approved, it will be integrated into financial instruments."

Mahmudzade also discussed the broader idea of developing a universal taxonomy for global "green finance." He noted ongoing discussions to create a Roadmap for harmonizing taxonomies, stating, "Currently, the classification of international investments is not the same. In other words, an investment that is considered 'green' for one country may not belong to the 'green' classification according to the criteria of another country. Harmonization of the taxonomy will support the identification of this classification, thus, the elimination of restrictions on international capital flows for the realization of the goals arising from the Paris Agreement. However, since each country has its own internal economic realities, this calls into question the effectiveness of applying a single taxonomy. Therefore, the development of a single taxonomy is not included in the list of issues on the sustainability agenda."