[Photo: FILE]
Fiji’s green finance taxonomy will only succeed if banks use it to fund eligible projects.
Businesses must also be able to develop proposals that meet the framework’s requirements.
This, according to the Reserve Bank of Fiji.
RBF Chief Manager Financial Systems Development Caroline Waqabaca says Fiji is policy-ready but not yet fully market-ready, meaning the country has established the framework for green finance but still needs to strengthen its ability to put it into practice.
Article continues after advertisement
The taxonomy sets out criteria for identifying economic activities that qualify as green.
It is intended to give banks and investors a common basis for deciding which projects support environmental and climate goals.
In practical terms, a business seeking finance for a project that reduces emissions or strengthens climate resilience needs to demonstrate how that project meets the relevant criteria.
Banks, in turn, need the knowledge and systems to assess those claims before deciding where to invest.
Waqabaca states the challenge now is moving the taxonomy beyond policy and into actual financing decisions. This requires more than encouraging banks to support sustainable development.
Financial institutions must be able to apply the criteria consistently, while businesses need to understand the requirements and develop projects capable of attracting investment.
The Reserve Bank has identified three priorities for adoption and it includes building the capacity of market participants, integrating the taxonomy into lending and investment decisions, and increasing the flow of capital into eligible projects.
The first priority involves equipping banks and businesses with the knowledge and skills to use the framework. The second means making the taxonomy part of how financial institutions assess funding applications, rather than treating it as a separate set of guidelines.
The third is about ensuring the framework helps unlock investment for projects that meet its standards. The stakes extend beyond reducing carbon emissions.
The taxonomy is also being expanded to cover climate adaptation and resilience, recognising the need to help economies and communities prepare for climate impacts.
Agriculture, buildings and manufacturing are among the sectors being considered for further development under the expanded framework.
For Fiji, this could help guide investment towards activities that support more sustainable production and strengthen resilience, provided projects meet the taxonomy’s criteria and attract financing.
Waqabaca adds that the framework’s success should ultimately be judged by whether it changes financing decisions, mobilises capital and produces measurable environmental and economic benefits.