Jun 2025
Recommendations to MoF on India's Draft Climate Finance Taxonomy
India’s Climate Finance Taxonomy was announced in the Union Budget 2024–25, with the draft framework released in May 2025 by the Ministry of Finance. It aims to establish a clear classification system for identifying activities that contribute to climate mitigation, adaptation, and sustainable development. The taxonomy will guide investors and policymakers in directing capital toward climate-aligned sectors, improve transparency, and reduce greenwashing, ultimately mobilising public and private finance to support India’s climate transition and long-term development goals under the Paris Agreement, SDG 6, and the vision of Viksit Bharat 2047.
The NFSSM Alliance and the ClimateRISE Alliance welcome the release of the draft framework and commend the Department of Economic Affairs for advancing India’s climate finance architecture. As cross-sectoral platforms working on climate-aligned sanitation and urban services, our submission focuses on strengthening the taxonomy’s relevance for the urban water and sanitation sector, with recommendations focusing on:
- Sectoral inclusion, particularly recognising sanitation and urban water systems as climate-relevant sectors
- Activity classification, covering wastewater management, faecal sludge management, and circular sanitation systems
- Institutional mechanisms to support implementation and monitoring
- Implementation frameworks that enable investments in decentralised infrastructure, MSMEs, and digital public infrastructure
Please download to access the detailed recommendations.