Costa Rica unveiled its first green taxonomy, hoping to guide investors toward sustainable projects. The taxonomy was jointly developed by the country’s financial regulators and environment ministry, with the support of the Banco Central de Costa Rica and finance ministry. The UN Environment Programme’s Finance Initiative (UNEP FI) coordinated the process.
Similarly to other taxonomies, Costa Rica’s is structured around technical criteria that help categorize economic activities according to the extent to which they help achieve seven identified national environmental objectives.
These include the mitigation of and adaptation to climate change, but also the sustainable use of water resources and the protection of biodiversity. The latter is notably important in a small Central American nation that contains nearly six percent of the world’s biodiversity, according to its government, despite accounting for only 0.03% of the Earth’s land surface. These ecosystems have been shifting rapidly due to climate change.
In future stages, the Taxonomy may be updated to reflect the inclusion of new environmental and social objectives, sectors, and economic activities. The taxonomy will help companies with transition planning and encourage the pursuit of green financing opportunities, while financial institutions can use it to help evaluate the environmental impact of credit or investment portfolios.
Costa Rica becomes the third Latin American economy to release a taxonomy, following Colombia in 2022 and Mexico in 2023. Numerous others are in the works across the region, including in Brazil and Argentina. A regional classification is being developed by the Central American Council of Supervisors of Banks, Insurance, and Other Financial Institutions.
Last year, the UN Development Program published a common framework for taxonomies across Latin America and the Caribbean to encourage comparability between those springing up around the continent.
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