Pakistan

Green
Taxonomy
2025 EDITION
DRAFT FOR PUBLIC CONSULTATION

January 2025

1
Table of Contents
Glossary .............................................................................................................................. 4
Acronyms and Abbreviations ............................................................................................ 8
Executive Summary ......................................................................................................... 12
Introduction....................................................................................................................... 15
Benefits and Uses ..................................................................................................................... 15
Structure .................................................................................................................................... 16
Guiding Principles ..................................................................................................................... 16
Environmental Objectives ......................................................................................................... 17
Sectors and Activities ............................................................................................................... 17
Screening Criteria...................................................................................................................... 17
Substantial Contribution Criteria.............................................................................................. 18
Do No Significant Harm ............................................................................................................. 18
Minimum Social Safeguards ..................................................................................................... 18
Technical Annexes ........................................................................................................... 19
Sectors and Activities that Contribute Substantially to Climate Change Mitigation ............ 19
Manufacturing .......................................................................................................................... 19
Transportation .......................................................................................................................... 36
Energy...................................................................................................................................... 46
Construction ............................................................................................................................. 59
Water and Waste...................................................................................................................... 68
Information and Communications Technology .......................................................................... 82
Guide for Tourism Sector in the Taxonomy .............................................................................. 85
Sectors and Activities that Contribute Substantially to Climate Change Adaptation ........... 87
Water ....................................................................................................................................... 90
Transportation .......................................................................................................................... 98
Information and Communications Technology .......................................................................... 99
Construction ........................................................................................................................... 102
Disaster Risk Management .................................................................................................... 105
Manufacturing ........................................................................................................................ 108
Energy.................................................................................................................................... 110
Waste ..................................................................................................................................... 111
Sectors and Activities that Contribute Substantially to Multiple Environmental Objectives
.................................................................................................................................................. 116
Agriculture (Including Livestock), Forestry, and Fishing .......................................................... 116
Bibliography.................................................................................................................... 137
Annex 1. General Framework—Alignment, Generic Do No Significant Harm, and
Minimum Social Safeguards .......................................................................................... 144
Annex 2. Market Baseline (business as usual) for Energy Consumption in Buildings
for Pakistan ..................................................................................................................... 148
Annex 3. Scheme for the Environmental Management Plan, Measures for Prevention
of Damage, and Environmental Benefits for Land Use Sectors ................................. 153
Annex 4. Suggested Outline for a Forest Management Plan ...................................... 157
Conclusion ............................................................................................................................... 157

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List of Figures
Figure 1. Sectors Covered in Pakistan’s Green Taxonomy ........................................................... 144
Figure 2. Alignment with Pakistan’s Green Taxonomy .................................................................. 145

List of Tables
Table 1. Guide for Tourism Sector—Ecotourism Investments ......................................................... 85
Table 2. Key Important Agricultural and Livestock Production Regulations on the Pakistan Market
..................................................................................................................................................... 117
Table 3. Regulations Associated with National Forest Restoration Plans ...................................... 124
Table 4. National Plans and Regulations Associated with Sustainable Fishing or Aquaculture ..... 132
Table 5. Generic Do-No-Significant-Harm (DNSH) Requirements ................................................ 145
Table 6. Preventive Compliance Requirements for Resource Protection (DNSH) - Land Use Sectors
..................................................................................................................................................... 153
Table 7. Measures to Enhance Environmental and Productive Benefits - Land Use Sectors ........ 154
Table 8. Comparison of U-Values Between American Society of Heating, Refrigerating, and Air-
Conditioning Engineers (ASRAE) 90.1 and Energy Conservation Building Code (ECBC) 2023 .... 151

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Glossary
Adaptation (climate Actions taken to manage the impacts of climate change by
change) reducing vulnerability and increasing resilience; focuses on
adjusting systems, practices, and structures to address current or
anticipated changes in the climate
Anaerobic digestion Process through which bacteria break down organic matter (e.g.,
animal manure, wastewater biosolids, food wastes) in the
absence of oxygen [1]
Baseline Benchmark against which performance and progress of a project
can be compared and assessed [2]
Better Cotton Initiative Nonprofit, multistakeholder governance group that promotes
better standards in cotton farming and practices across 22
countries [3]
Biochemical oxygen Amount of oxygen that bacteria and other microorganisms
demand consume while decomposing organic matter under aerobic
(oxygen is present) conditions at a specified temperature [4]
Biodigester Airtight systems (e.g., containers or tanks) in which naturally
occurring microorganisms decompose organic material, diluted in
water, generally after contaminants and moisture are removed [5]
Biofertilizer (Also known as biological or organic fertilizer) fertilizer containing
living organisms, based on phosphate solubilizing, nitrogen fixing
potassium, ferrous, sulfur, manganese solubilizers, and zinc-
mobilizing microbes in the market microbes. Biodegradable and
not chemically synthesized. [6]
Biofuel Liquid fuels and blending components produced from biomass
materials called feedstocks; may also include methane produced
from landfill gas and biogas and hydrogen produced from
renewable resources [7]
Biofuel Fuels derived directly or indirectly from biomass, divided into
three categories [8]:
Solid biofuels (e.g., firewood, wood residue, wood pellets, animal
waste, vegetable material)
Liquid biofuels (e.g., bioethanol, biodiesel, biojet kerosene)
Biogases (from anaerobic fermentation and thermal processes)
Biogas Gas mixture with high methane content [9]
Biomethane A near-pure source of methane produced by “upgrading” biogas
(a process that removes any carbon dioxide or other
contaminants present in the biogas) or gasifying solid biomass
followed by methanation [10]
Biozote A biofertilizer developed by the National Agricultural Research
Centre in Pakistan
Carbon intensity Amount of carbon dioxide emissions released per unit of another
variable, such as gross domestic product, final energy use, or
transportation [11]

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Carbon sink Forest or other ecosystem that absorbs carbon dioxide, removing
it from the atmosphere and offsetting carbon dioxide emissions
[12].
Circular economy A model of production and consumption that involves sharing,
leasing, reusing, repairing, refurbishing, and recycling existing
materials and products as long as possible [13]
Climate change Climate transformation attributed to human activity that directly or
indirectly alters the composition of the global atmosphere in
addition to natural variability observed during comparable periods
[14]; can be identified (e.g., by statistical tests) according to
changes that persist over long periods of time (decades or
longer) in the mean value of climate properties or the variability
of these properties [15]
Climate Risks Climate risks are categorized into physical risks and transition
risks. Physical Climate Risks arise from climate-related hazards
that impact assets, infrastructure, and operations. Transition
Climate Risks result from policy, market, and technological shifts
toward a low-carbon economy.
Climate-smart agriculture An approach that uses green, climate-resilient practices in
agriculture; helps reach internationally agreed goals such as the
Sustainable Development Goals and the Paris Agreement
sustainably increasing agricultural productivity and incomes,
adapting and building resilience to climate change, and reducing
or removing greenhouse gas emissions [16]
Composting A biological process that subjects biodegradable waste to
anaerobic or aerobic decomposition, resulting in a product used
in soil or for producing substrates or growing media [17]
Cross-docking A logistics and supply chain strategy where inbound goods are
transferred directly from incoming trucks or railcars to outbound
vehicles with minimal storage time
Decarbonization Removal of carbon dioxide from or reduction of its release into
the atmosphere by switching to use of low-carbon energy
sources [18]
Deforestation Removal of trees from land and its conversion to non-forest use
[19]
Digestate A valuable residue generated as a by-product of anaerobic
digestion, characterized by its nutrient-rich composition, which
includes a balanced mixture of macro- and micronutrients
essential for plant growth [20]
Environmental Description of how a project or activity might affect the natural
management plan environment in which it occurs and a list of clear commitments
and actions on how those impacts will be avoided, minimized,
and managed so that they are environmentally acceptable [21]
Forest management plan Planning and implementing practices for stewardship and use of
forests and other wooded land with environmental, economic,
social, and cultural objectives [22]
Fossil fuel Carbon-based fuel from fossil carbon deposits, including oil,
natural gas, and coal [23]

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 Fossil fuel blends Refer to fuels that are a mixture of fossil fuels and other energy
sources, such as biofuels or synthetic fuels, often used as a
transitional step toward decarbonization.
Global warming Estimated 30-year, or 30-year average global mean surface
temperature increase expressed relative to pre-industrial levels,
unless otherwise specified [24]
Greenhouse gas Natural and anthropogenic gaseous constituents of the
atmosphere that absorb and re-emit infrared radiation, including
carbon dioxide, methane, nitrous oxide, hydrofluorocarbons,
perfluorocarbons, and sulfur hexafluoride [15]
Greenwashing A type of advertising that intentionally or unintentionally attributes
false environmentally positive qualities to a service or product
[25]
Green Taxonomy Classification system for identifying activities or investments that
will move a country toward specific targets related to priority
environmental objectives
Mitigation (climate change) Efforts to reduce or prevent greenhouse gas emissions to limit
extent of climate change; focused on addressing root causes of
climate change by decreasing sources or enhancing he sinks of
emissions
Nationally determined A country’s national climate action plan under the Paris
contribution Agreement that outlines how it plans to reduce greenhouse gas
emissions to meet Paris Agreement goals and adapt to the
impacts of climate change [26]
Net zero A state wherein the amount of greenhouse gas emissions
removed from the atmosphere balances the amount emitted [27]
Non-hazardous waste Waste materials that do not pose direct risks to human health or
the environment, such as paper, plastics, organic waste, glass,
and metals.
Notre Dame-Global Measures a country’s vulnerability to climate change and
Adaptation Index assesses its readiness to leverage private and public sector
investment for adaptive actions [28]
Organic fertilizer Material of animal origin used to maintain or improve plant
nutrition and physical and chemical properties and biological
activity of soils, separately or together (e.g., manure, digestive
tract content, compost, digestion residues) [29]
Perennial crop Crops typically considered more permanent, requiring a number
of growth cycles before fruit is produced1. [30]
Product carbon footprint Total greenhouse gas emissions created during a product’s life-
cycle from raw material extraction through pre-processing,
manufacturing, distribution, use, and disposal; typically measured
in carbon dioxide equivalents, which allows different types of
greenhouse gases to be compared on a common basis [31]

1 The production of perennial crops is long-term and thus particularly vulnerable to climate change as the production areas have less
flexibility in their location and the production cycle is often measured in decades rather than single growing seasons

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Ramsar site A site listed on the List of Wetlands of International Importance,
also known as the Ramsar List, that meets the criteria for
identifying wetlands of international importance [32].
Regenerative agriculture A transformational method of agriculture that restores and
enhances ecosystem health while maintaining food production,
rebuilding ecological systems, enhancing soil fertilization, and
providing resilience against climate change [33]
Substantial contribution Activities and economic assets that, by meeting established
criteria substantial contribution criteria, support the achievement of
environmental objectives defined in the taxonomy
Soil degradation Change in the soil health status that decreases the capacity of
the ecosystem to provide goods and services for its beneficiaries.
Sustainable development Development that leads to economic growth, good quality of life,
and social well-being without depleting the renewable natural
resource base, damaging the environment, or limiting the right of
future generations to use the environment to meet their own
needs [34]
Sustainable urban drainage An environmentally beneficial drainage system that causes
system minimal or no long-term damage; often organized as a sequence
of management practices, control structures, and strategies to
drain surface water efficiently and sustainably while minimizing
pollution and managing the impact on the quality of local water
bodies [35]
Upflow anaerobic sludge An anaerobic digester used in wastewater treatment that
blanket digestion produces methane and forms a blanket of granular sludge that
the anaerobic microorganisms processed [36]
Volatile organic Compounds with high vapor pressure and low water solubility;
compounds often human-made chemicals used and produced in the
manufacture of paints, pharmaceuticals, and refrigerants;
typically industrial solvents, fuel oxygenates, or by-products
produced by chlorination in water treatment, such as chloroform;
common ground-water contaminants [37]
Water stress Demand for water that is greater than the amount available
during a given period [38]

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Acronyms and Abbreviations
AD Anaerobic digestion
AFOLU Agriculture, Forestry, and Other Land Uses
ANSI American National Standards Institute
ASEAN Association of Southeast Asian Nations
ASHRAE American Society of Heating, Refrigerating, and Air-Conditioning Engineers
ATES Aquifer thermal energy storage
BAP Best Aquaculture practices
BCI Better Cotton Initiative
bio-CNG Bio-Compressed Natural Gas
BMS Building Management Systems
BOD Biochemical oxygen demand
CAES Compressed-air energy storage
CAPEX Capital expenditure
CARL Current Annual Real Losses
CBI Climate Bonds Initiative
CCGT Combined cycle gas turbine
CCUS Carbon capture, utilization and storage
CII Carbon Intensity Indicator
CO2 Carbon dioxide
CPI Climate Policy Initiative
CSA Climate smart agriculture
CSP Concentrated solar power
CTM Coal Transition Mechanism
DNSH Do no significant harm
EAF Electric Arc Furnace
ECBC Energy Conservation Building Code
EDGE Excellence in Design for Greater Efficiencies
EEDI Energy Efficiency Index
EEXI Energy Efficiency Existing Ship Index
EHS Environmental, Health, and Safety
ELECTRE Elimination and Choice Translating Reality
EPA Environmental Protection Agency
EPC Energy Performance Certificate
ESCO Energy service company

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ESG Environmental, social, and governance
ETP Endangered, Threatened, or Protected
EU European Union
EU RED European Union Renewable Energy Directive
EV Electric Vehicle
FCBTK Fixed Chimney Bull's Trench Kiln
FRP Floods Response Plan
FSC Forest Stewardship Council
GDP Gross domestic product
GHG Greenhouse Gas
Global GAP Global Good Agricultural Practices
GOT Global Organic Textile
GWP Global Warming Potential
HC Hydrocarbons
HCS High-carbon stock
HEIS High Efficiency Irrigation System
HQE High Environmental Quality
HVAC Heating, ventilation, and air conditioning
IAPP International Air Pollution Prevention
ICAO International Civil Aviation Organization
ICMA International Capital Market Association
ICT Information and communications technology
IEA International Energy Agency
IESNA Illuminating Engineering Society of North America
IFC International Finance Corporation
IFM Integrated Farm Management
IFOAM International Federation of Organic Agriculture Movements
ILI Infrastructure Leakage Index
IMO International Maritime Organization
IMTA Integrated Multi-Trophic Aquaculture
IPCC Intergovernmental Panel on Climate Change
ISCC International Sustainability and Carbon Certification
ISIC International Standard Industrial Classification of All Economic Activities
ISO International Standards Organization
IT Information technology
ITDP Institute for Transportation and Development Policy

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IUCN International Union for Conservation of Nature
IWQGES International Water Quality Guidelines for Ecosystems
LCE Life Cycle Emissions
LED Light-emitting diode
LEED Leadership in Energy and Environmental Design
MARPOL International Convention for the Prevention of Pollution from Ships
MDBs Multilateral development Banks
Micro-CHP Combined Heat and Power (Micro scale)
MSW Municipal solid waste
NBSAP National Biodiversity Strategy and Action Plan
NCCP National Climate Change Policy
NDC Nationally Determined Contribution
ND-GAIN Notre Dame-Global Adaptation Index
NEECA National Energy Efficiency and Conservation Authority
NEP National Electricity Policy
NEQS National Environmental Quality Standards
NMHC Non-methane hydrocarbons
NWP National Water Policy
OECD Organisation for Economic Co-operation and Development
Op Opacity
PA Paris Agreement
PAHs Polycyclic aromatic hydrocarbons
PCF Product Carbon Footprint
PCST Pakistan Council for Science and Technology
PCRWR Pakistan Council of research in water resources
PEFC Programme for the Endorsement of Forest Certification
PEPA Pakistan Environmental Protection Act
PEQS Punjab Environmental Quality Standards
PGP Power Generation Policy
PIEVC Public Infrastructure Engineering Vulnerability Committee
PM Particulate matter
PNAP Pakistan National Adaptation Plan
POIG Palm Oil Innovation Group
PSIC Pakistan Standard Industrial Classification
PV Photovoltaic
REDD+ Reduced Emissions from Deforestation and Forest Degradation

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RSB Roundtable on Sustainable Biomaterials
SAF Sustainable aviation fuel
SAICM Strategic Approach to International Chemicals Management
SEEMP Ship Energy Efficiency Management Plan
SIR State of Industry Report
SLCPs Short-lived climate pollutants
Smartcane Smartcane Best Management Practice program
BMP
SPL Spent Pot Lining
SPN Sustainable Poultry Network
SRP Sustainable Rice Platform
SSPI Intensive silvopastoral systems
SUDS Sustainable drainage system
TCO2e Tonnes of carbon dioxide equivalent
TNA Technology Needs Assessment Report
TRI The Restoration Initiative
UARL Unavoidable Annual Real Losses
UASB Upflow anaerobic sludge blanket digestion
UNEP United Nations Environment Programme
UNFCCC United Nations Framework Convention on Climate Change
UTES Underground Thermal Energy Storage
WEEE Waste Electrical and Electronic Equipment
WHO World Health Organization
WMO World Metrological Organization
WWF World Wildlife Fund

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Executive Summary
Pakistan’s commitment to sustainable development and climate resilience necessitates
development of a green taxonomy that provides clear definitions of what green means in order to
increase capital flows into sectors that are critical for achieving its climate and broader
environmental goals.
Objective. Pakistan’s green taxonomy, developed with technical assistance from the World Bank, is
intended to provide clarity to financial market participants on how to identify green economic
activities, increase the transparency of green investments and financial products, mitigate climate-
related financial risks, and help the financial sector direct capital flows to projects or activities that
will meet the country’s environmental and climate objectives.
Environmental objectives. The environmental objectives covered in the taxonomy are:
 Climate change mitigation
 Climate change adaptation
 Sustainable use and protection of water resources
 Protection of healthy ecosystems and biodiversity
 Pollution prevention and control
 Promotion of circular economy
 Sustainable land management
The first version of the taxonomy identifies economic activities that contribute substantially to
climate change mitigation and adaptation while avoiding significant harm to other environmental
objectives.
Substantial contribution means that an economic activity makes a meaningful and measurable
contribution to stated environmental goals. For an activity to qualify as being environmentally
sustainable, it must contribute substantially to climate change mitigation or adaptation while also
complying with do-no-significant-harm criteria and minimum social safeguards.
Sectors covered. Sectors that contribute substantially to climate change mitigation were identified
based on an analysis of priority sectors in Pakistan's climate strategies and policies and a
benchmarking exercise to ensure consistency, to the extent possible, with other taxonomies. This
evaluation was complemented with a quantitative analysis of the economic relevance of each sector
using gross domestic product and greenhouse gas emissions. The sectors identified as most
relevant for climate change mitigation are manufacturing, transportation, energy, construction,
waste and water, information and communications technology (ICT), tourism, agriculture, forestry,
fishing, and livestock. (See below for how these sectors are treated in the taxonomy.) A traffic light
system is used to indicate eligible and ineligible activities.
The sectors relevant for climate change adaptation were identified by reviewing key national policies
on climate change adaptation, sector coverage in existing taxonomies, and the Notre Dame Global
Adaptation Initiative’s (ND-GAIN) Country Index for Pakistan.2 Based on the analysis, water,
disaster risk management, and urban resilience (transportation, ICT, construction, manufacturing,
waste, energy) sectors were prioritized. The climate change adaptation objective includes adapted
and enabling activities and measures .
The agricultural, forestry, fishing, and livestock sectors contribute substantially to several
environmental objectives simultaneously, including climate change mitigation and adaptation. A
practice-based approach was used for these sectors that enables a transition from basic to
advanced practices over time. This approach is commonly used for these sectors in taxonomies.

2
This index calculates a country’s vulnerability to climate disruptions and assesses its readiness to leverage private and public sector
investment for adaptive action.

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Transitional and ineligible practices were also identified to achieve a gradual shift toward
sustainable, resilient systems.
Interoperable but locally relevant. The taxonomy was developed based on a benchmarking
exercise involving a number of globally recognized taxonomies to ensure interoperability while
considering the national context. Local experts assessed metrics, thresholds, local availability,
technology readiness, and affordability to ensure that the taxonomy accounts for the local context.
Where necessary, international criteria were adapted to the local context without losing scientific
rigor and credibility.
Dynamic. The Pakistan green taxonomy is a dynamic document and is expected to undergo
periodic revisions to update the criteria based on changes in environmental priorities and goals; cost
and availability of new technologies; and the need to include other sectors, activities, and
environmental objectives.
Green Taxonomy Project. Pakistan’s green taxonomy was developed with technical assistance
from the World Bank Group and funded by the U.K. Foreign, Commonwealth and Development
Office. The State Bank of Pakistan initiated the project in January 2024. The process for developing
the taxonomy followed the recommendations in the World Bank report "Developing a National
Green Taxonomy" [39]. The taxonomy is being developed in phases, with the current version
focusing on substantial contribution to the objectives of climate change mitigation and adaptation.
Eligible activities that contribute to other environmental objectives will be developed in subsequent
phases.
Governance. The State Bank of Pakistan convened a Working Group to support the development
of the taxonomy. Members and technical experts involved in the development of the taxonomy are
as follows:

Working Group
State Bank of Pakistan
Ministry of Climate Change
Ministry of Finance and Revenue
Ministry of Planning Development and Special Initiatives
Securities Exchange Commission of Pakistan
Pakistan Stock Exchange
National Energy Efficiency and Conservation Authority
National Electric Power Regulatory Authority
Private Power and Infrastructure Board)
Environmental Protection Department, Punjab
Sindh Environmental Protection Agency
Environmental Protection Agency, Khyber Pakhtunkhwa
Environmental Protection Agency, Balochistan
Environmental Protection Agency, Azad Jammu and Kashmir
Environmental Protection Agency, Gilgit Baltistan
Pakistan Bankers Association
Federal Board of Revenue
Board of Investment

Technical Experts
Ministry of Communications
Ministry of Information Technology and Telecommunications
Ministry of Maritime Affairs
National Disaster Management Authority
Pakistan Tourism Development Corporation
Ministry of Energy (Power Division)
Ministry of Housing and Works

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Ministry of Industries and Production
Ministry of Commerce
Pakistan Council of Research in Water Resources
National Disaster Management Fund
Global Climate Change Impact Studies Centre
Pakistan Agricultural Research Council

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Introduction
Background
Climate change affects nature, people and the global economy. According to the World Metrological
Organization, Asia is the most populous continent and is warming faster than the global average
[40]. Like other developing countries in Asia, Pakistan is facing significant climate change
challenges, including climatic variability, which is reducing the availability of water and leading to
more severe, more frequent, and longer droughts and extreme weather events such as floods.
Climate action is the most important priority for the government and people of Pakistan today [41].
Pakistan's updated 2021 nationally determined contributions (NDCs) represent a paradigm shift
toward an inclusive, innovative, whole-of-economy approach to addressing climate change
challenges through targeted adaptation and mitigation actions. Ranked second among countries
with poor air quality in 2023 according to the Air Quality Index, with an average concentration of
particulate matter (PM2.5), 14.7 times as great as the WHO annual air quality guideline, Pakistan
has initiated various programs designed to control emissions from industry, vehicles, and other
sources [42]. The revised NDCs have an unconditional emissions reduction target of 15 percent
and a conditional target of 35 percent by 2030 from the 2015 baseline. The revised NDCs commit to
also increasing protected area land coverage from 12 to 15 percent, shifting the energy mix toward
60 percent renewable and alternative energy, and increasing the number of electric vehicles by 30
percent by 2030.
The transformation of Pakistan into a sustainable economy entails balancing social, economic, and
environmental needs and requires significant investment. In 2021, approximately US$4 billion in
public and private capital was invested in climate mitigation and adaptation activities in Pakistan, of
which international actors such as multilateral development banks, multilateral funds, and private
investments contributed 84 percent. The World Bank estimates that total investment need for a
comprehensive response to Pakistan's climate challenges between 2023 and 2030 is approximately
US$348 billion (10.7 percent of cumulative gross domestic product [GDP] for the same period):
US$152 billion (44 percent) for supporting adaptation and resilience and US$196 billion (56 percent)
for decarbonization and mitigation [41].
In Pakistan, the energy and the agricultural, forestry, and other land use sectors have the greatest
mitigation potential. However, other priority climate interventions are required to support adaptation
and resilience, especially to address climate risks to Pakistan’s critical systems such as water and
food security, infrastructure and built environment, industry, and biodiversity.
The Pakistan green taxonomy defines green and transitional3 activities based on national context
using criteria that are science based and interoperable4 with other globally recognized taxonomies.
Interoperable means that the design elements of the taxonomy are consistent with accepted best
practices to accelerate deployment of capital across borders.

Benefits and Uses

By providing clear, science-based definitions of green economic activities, green taxonomies can
remove barriers to capital flows and avoid greenwashing. This helps the financial sector identify
green and sustainable investments that contribute to a country’s climate and environmental goals
and increase transparency in financial markets.

3
Transitional activities are those that decarbonize high-emitting and hard-to-abate industries such as steel, aviation, and shipping.
4
According to UNEP, interoperability indicates that taxonomies should be based on similar guiding principles and have certain design
elements such as objectives and classification systems for sectors and activities that are comparable and similar in approaches and
methodologies used for defining eligibility. Interoperability enables taxonomies to be compared across jurisdictions and facilitates cross-
border capital flows.

15
Financial market participants (e.g., financial institutions, asset owners, investment managers, green
bond and sukuk issuers) can use the taxonomy to identify and allocate capital to activities and
projects that help a country mitigate and adapt to climate change. Financial regulators can introduce
the reporting of taxonomy-eligible and taxonomy-aligned economic activities and assets in the
financial sector with the aim of:
 Expanding green financing in priority sectors to support the government’s climate and
environment-related policies
 Enhancing the financial system’s resilience to climate-related financial risks
Pakistan’s green taxonomy is intended to have a range of benefits. Among other things, it will:
 Help the financial sector with clarity and certainty in selecting green investments in line with
international best practices and Pakistan’s national policies and priorities.
 Reduce financial risks by providing clear definitions of green and sustainable activities and
improving environmental and social performance management.
 Reduce costs associated with identifying green investments, labeling and issuing green
financial instruments.
 Unlock potential investment opportunities for Pakistan in a broad range of green and
climate-friendly assets.
 Promote transparency and support regulatory and supervision oversight of the financial
sector.

Structure
In line with best practices promoted by the World Bank Group, Pakistan’s green taxonomy includes
the following structural elements.
• Guiding principles
• Objectives
• Sectors
• Economic activities
• Screening criteria: substantial contribution, do no significant harm, minimum social
safeguards

Guiding Principles
The following guiding principles established in the Group of 20 Principles for Sustainable Finance
Alignment were followed to ensure interoperability and credibility [43]
• Principle-1: Ensure substantial contribution to sustainability goals and outcomes.
• Principle-2: Avoid negative contribution to sustainability goals.
• Principle-3: Be dynamic in adjustments reflecting changes in policies, technologies, and
state of transition.
• Principle-4: Reflect good governance and transparency.
• Principle-5: Be science based for environmental goals and science and evidence based for
other sustainability issues.
• Principle-6: Address transition considerations.

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Environmental Objectives
The taxonomy focuses on economic activities that contribute substantially towards climate
change mitigation and climate change adaptation, while doing no significant harm to the following
environmental objectives:
 Sustainable use and protection of water resources
 Protection of healthy ecosystems and biodiversity
 Pollution prevention and control
 Promotion of circular economy
 Sustainable land management

Sectors and Activities

To prioritise sectors and economic activities, both qualitative assessments of national policies and
priorities and quantitative evaluation of data such as the GDP contribution of sectors, GHG
emissions, vulnerability and readiness index were carried out. These were validated by national
experts to ensure applicability to the country.

Climate Change Mitigation

 Manufacturing
 Transport
 Energy
 Construction
 Water and Waste
 Information and Telecommunication (ICT)
 Tourism

Climate Change Adaptation

 Water
 Disaster risk management
 Urban resilience, including transportation, ICT, construction, manufacturing, waste, and
energy

Multiple Objectives
 The agricultural, forestry, and fishing (including livestock) sectors contribute substantially to
multiple environmental objectives, including climate change mitigation and adaptation,
sustainable use and protection of water resources, protection of healthy ecosystems, and
biodiversity.

Screening Criteria
Screening criteria refer to the specific, measurable standards or thresholds used to determine
whether an economic activity qualifies as environmentally sustainable and are designed to assess
the activity’s alignment with defined environmental objectives and help determine its substantial
contribution.
Screening criteria include performance metrics, technical requirements, and minimum thresholds
that must be met to ensure that the activity contributes positively to environmental and social goals.

17
For an activity to qualify as being environmentally sustainable, it must contribute substantially to
climate change mitigation or adaptation while also complying with do-no-significant-harm (DNSH)
criteria and minimum social safeguards.

Substantial Contribution Criteria

Substantial contribution signifies that an economic activity makes a meaningful and measurable
contribution to environmental goals.
Pakistan’s green taxonomy uses a traffic light system for the substantial contribution criteria under
the climate change mitigation objective.
 Green: Activities that contribute substantially by operating at near-zero emissions or are on
a 1.5°C-aligned pathway
 Amber: Activities that are not currently on the 1.5°C pathway but are moving toward a green
transition pathway or facilitate significant emissions reduction in the short term
 Red: Activities that are not eligible under the taxonomy
For the objective of climate change adaptation, the substantial contribution criteria are defined using
metrics and thresholds that are quantifiable or verifiable, qualitative, based on vulnerability
assessments, or automatically eligible.
For activities under the agricultural, forestry, livestock, and fishing sectors, the criteria use a
practice-based approach that can be classified as basic, intermediate, or advanced based on level
of complexity.

Do No Significant Harm
The DNSH criteria ensure that the economic activity, while contributing substantially to one
environmental objective, does not significantly harm other environmental objectives. The activities
must comply with generic DNSH (described in Annex 1) and specific DNSH (described in the
technical annexes) criteria.

Minimum Social Safeguards

Minimum social safeguard criteria ensure that the economic activity does not generate social harm.
To assess these risks, the entity implementing the activity must comply with the requirements
established in Annex D and E of the Environmental and Social Risk Management Implementation
Manual that the State Bank of Pakistan developed or the International Finance Corporation (IFC)
Performance Standards. The MSS are explained in detail in Annex 1.

18
Technical Annexes
This section identifies green activities that meet Pakistan’s climate change mitigation and adaptation
objectives in each sector, as well as sustainable practices for the agricultural, forestry, and fishing
sectors (including livestock and aquaculture) specifically, where identified activities support not just
climate change mitigation and adaptation, but also sustainable use and protection of water
resources and protection of healthy ecosystems and biodiversity.
Each activity is presented with technical screening criteria. The activity must meet the technical
criteria to confirm that it makes a substantial contribution to an environmental objective. The activity
must also do no significant harm to the remaining environmental objectives. The DNSH principle
ensures that the economic activity being screened does not interfere with achieving other
environmental objectives.

Sectors and Activities that Contribute

Substantially to Climate Change Mitigation
Pakistan is the world's 21st largest emitter (in absolute terms) of GHGs, contributing about 1 percent
of global GHG emissions. The sectors with the greatest contribution to GHG emissions are the land
use sectors (agriculture, forestry, livestock, fishing), which account for 45.6 percent of total
emissions, followed by energy, which accounts for 44.7 percent [44]. Pakistan ranks 8th among
methane emitters globally [45], mainly because of emissions associated with agriculture and
energy.
Besides GHG emissions, economic activities in the transportation, manufacturing, and agricultural
sectors affect air quality significantly. Pakistan has the second-worst air quality globally (after
Bangladesh), with an average PM2.5 concentration(µ/m3), 14.7 times the World Health
Organization annual air quality guideline value [46].
An explanation of the impact of the economic activity on climate change mitigation is provided for
each sector, and a list of activities that could be aligned with the ambition of the taxonomy
(contribute substantially to climate change mitigation) is included.

Manufacturing
GHG emissions from manufacturing arise from the use of fossil fuels in processes such as fertilizer
production; coal in cement manufacturing; fossil fuel combustion in the steel industry; and energy
consumed in the chemical, paper, food, beverage, tobacco processing, textile, leather, and other
industries. Manufacturing industries and industrial processes contributed 25,76 Mt CO2e of the total
GHG emissions of Pakistan, making the industrial sector an important contributor [47]. Hence, it is
critical to address inefficient energy consumption generated by fossil fuel combustion in the
industrial sector, and thereby reduce GHG emissions and air pollution, mainly in urban areas. In
2022/23, the manufacturing sector accounted for 14.3 percent of the country's GDP. The textile
sector is at the center of Pakistan’s export-led growth strategy [48].

Activities performed in the manufacturing sector are shown below.

19
 Activity International Standard
Industrial Classification
(ISIC)/Pakistan Standard
Industrial Classification
(PSIC) code
M1. Manufacture of basic chemicals C2011
M2. Manufacture of cement C2394
M3. Manufacture of basic iron and steel C2410
M4. Manufacture of aluminum C2420
M5. Manufacture of plastics in primary form C2013
M6. Manufacture of batteries C2720
M7. Manufacture of renewable energy technologies C2710, C2720, C3510
M8. Manufacture of low-carbon technologies for transport C2811, C29, C30
M9. Manufacture of energy efficiency equipment for buildings C2740, C2750
M10. Manufacture of other low-carbon technologies N.A.
M11. Manufacture of textiles with green or sustainable 1311, 1312, 1313, 1391,
certification 1393, 1399, 1410, 1430,
1520
M12. Manufacture of bricks C2392
M13. Research and development—professional services N.A.
M14. General guidance for other manufacturing industries N.A.

The technical factsheets for 14 selected activities are provided below.

Sector Manufacturing
Activity M1. Manufacture of basic chemicals
ISIC/PSIC C2011
Description Manufacturing of organic basic chemicals with high efficiency levels (large
volume at low cost) or those using renewable energy sources contributes
substantially to the objective of mitigating climate change. For the manufacturing
of other organic basic chemicals, it has been proposed that the absolute
performance approach be used to identify the maximum acceptable carbon
intensity that the activity must meet to contribute substantially to the mitigation
objective. The production of chemicals includes organic basic chemicals such as
acids, anhydrides, industrial alcohols, ketones, aldehydes, fatty acids, turpentine,
rosin, non-edible natural dyes, wood distillates such as gums and resins, and
other basic organic products not classified elsewhere.
Objective Climate change mitigation
Methodology Criteria
Green Manufacturing of chemicals covered in this activity must meet one of the
following criteria:
 The GHG emissions from the production processes of basic organic
chemicals should be lower than:

20
 o 0.693 tCO2e/t of high-value chemical (HVC)
o 0.0072 tCO2e/t of a complex weighted yield of an aromatic
o 0.171 tCO2e/t of vinyl chloride
o 0.419 tCO2e/t of styrene
o 0.314 tCO2e/t of ethylene oxide or ethylene glycol
o 0.32 tCO2e/t of adipic acid
 Manufacture must be based entirely or partially on renewable raw
materials. For application of these criteria, renewable raw materials refer
to biomass, industrial biowaste, or municipal biowaste.
o If the raw material is biomass (excluding industrial and municipal
biowaste):
 Complete traceability of the supply must be established
through the corresponding chain-of-custody management
system and its effectiveness demonstrated through
appropriate certification systems.
 All forest biomass used in the process must comply with
forestry regulations and criteria established in the forestry
sector.
 A regularly audited independent third-party actor must
certify any forest biomass used in the process. Forest
management practices and chain of custody in supply
areas that are not certified must be aligned with the
requirements of the certification.
 Forest biomass from irrigated forest plantations cannot be
used.
o If the raw material is industrial biowaste (including from the food
industry or municipal biowaste):
 It must comply with the regulatory framework for waste and
with national, regional, and local waste management plans.
 When municipal biowaste is used as a raw material, the
biowaste is considered complementary and does not
compete with existing municipal biowaste management
infrastructure.
 Organic chemicals within the scope that are produced
entirely or partially from renewable raw materials must
have lower GHG emissions over the product's life cycle
than those manufactured from fossil fuels. GHG emissions
(scope 1 and 2) are calculated using International
Standards Organization (ISO) 14067:2018 or 14064-
1:2018. An independent third party must verify quantified
GHG emissions.
The chemicals must also have a substantially smaller carbon footprint than
chemicals manufactured from chemical raw materials. This carbon footprint will
be calculated according to ISO 14067:2018 and validated by a third party. For
application of these criteria, renewable raw materials refer to biomass, industrial
biowaste, or municipal biowaste.
Amber Amber category is applicable until 2035; all eligible decarbonization measures
(transition) must be implemented before then.
Criteria:
 At least 50 percent of annual products manufactured is on the list of basic
chemicals in scope.

21
  The company has a transition plan that is aligned with the 1.5ºC target of
the Paris Agreement.
Ineligible Facilities or measures in which:
 The energy source is 100 percent coal or fossil fuel, and there is no
transition plan to switch to a sustainable energy source.
 Coal is used for on-site electricity generation.

DNSH Requirements
Prevention and control of pollution
 Emissions from the production process are within emission levels associated with best
available techniques.

Sector Manufacturing
Activity M2. Manufacture of cement
ISIC/PSIC C2394
Description Reducing emissions from cement manufacturing is crucial, given that it is
responsible for emitting approximately 8 percent of the world's CO2 emissions
(Cheng, Reiner, and Yang 2023). The manufacture of cement proposes
minimizing process emissions by increasing energy efficiency, increasing use of
alternative fuels and material co-processing for energy production, and promoting
reduction of the cement clinker factor. The proposed approach for this activity is
absolute performance, aiming to identify the maximum acceptable carbon
intensity that the activity must meet to contribute decisively to the mitigation
objective.
Objective Climate change mitigation
Methodology Criteria
Green Cement clinker production
 Net (scope 1 and 2) emissions associated with clinker production processes
are less than 0.8 tCO2e/t of gray clinker produced.
Cement production:
 Net (scope 1 and 2) emissions associated with cement production processes
are less than 0.6 tCO2e/t of gray cement produced.

22
Amber Eligible decarbonization measures or retrofitting activities (capital investments)
(transition) must be implemented before 2035 and constitute one or more of the following
measures.
 Installation, upgrade, and operation of precalciners
 Installation, upgrade, and operation of heat recovery systems
 Installation of desulfurization, denitrification, and dust removal facilities;
exhaust treatment facilities for heavy metal gases
 Installation, upgrade, and operation of digitized control equipment or
infrastructure, including
o Sensors and measurement tools (e.g., software to allow real-time,
close control of processes to increase efficiency)
o Communication and control (e.g., advanced software and control
rooms, automation of plant processes)
 Installation, upgrade, and operation of testing equipment (e.g., automated
X-ray diffractometer systems
 Electrification of heat (e.g., electrified kiln processes)
 Installation, upgrade, retrofit, and operation of measures to reduce
emissions equivalent to the emissions mitigation required for facilities
over the lifespan of the debt instrument, in compliance with Paris
Agreement by 2035
 Installation, upgrade, and operation of carbon capture and storage
equipment aligned with the taxonomy criteria (Green category)
 Infrastructure, revamp, or modification of equipment for cement
production using hydrogen as a fuel that are aligned with taxonomy
criteria for hydrogen (Green category)
 Installation, upgrade, and operation of technologies that enable the clinker
binder ratio to be reduced (proportion of clinker used in cement
production) to 0.58
Measures are applicable in a production facility where a company has a transition
plan aligned with the 1.5°C target of the Paris Agreement.
Ineligible Facilities or measures in which:
 The energy source is 100 percent coal or fossil fuels and has no transition
plan to switch to sustainable energy sources.
 Coal is used for on-site electricity generation.

DNSH Requirements
Pollution prevention and control
 Process emissions are within emission levels associated with best available techniques and
comply with local regulations.

Sector Manufacturing
Activity M3. Manufacture of basic iron and steel
ISIC/PSIC C2410
Description Contributes substantially to climate change mitigation, promotes energy
efficiency and energy consumption from renewable sources because iron and
aluminum manufacturing consumes a large amount of electricity, resulting in
significant GHG emissions.

23
 This activity considers secondary production of steel , meaning use of recycled
scrap steel, to be directly eligible because its emissions are significantly lower
than with primary production, and it contributes to the circular economy.
In the future, the iron and steel industries are expected to adopt technologies with
ultra-low CO2 emissions, including superior blast furnace gas recycling with
carbon capture and storage, direct reduction processes, and direct electrolysis of
iron ore. Proposed thresholds must be reviewed by then to reflect the most
ambitious achievable emission values.
Objective Climate change mitigation
Methodology Criteria
Green The activity must meet at least one of the following criteria.
 All steel produced in an electric arc furnace and for which at least 90
percent of the iron content of the final product comes from scrap steel is
eligible. In this case, no other thresholds apply.
 GHG emissions (scope 1 and 2) from production of iron and steel do not
exceed the following values applied to the various manufacturing process
steps:
o hot metal = 1.331 tCO2e/t of product
o sintered ore = 0.163 tCO2e/t of product
o coke (excluding lignite coke) = 0.144 tCO2e/t of product
o iron casting = 0.299 tCO2e/t of product
o electric arc furnace high alloy steel = 0.266 tCO2e/t of product
o electric arc furnace carbon steel = 0.209 tCO2e/t of product
 Other melting technologies such as induction furnace, basic oxygen
furnace with energy recovery, and hydrogen-based direct reduced
ironmaking that meet the substantial contribution criteria for electric arc
furnace are eligible.
All production of new green steel, or the combination of new steel production and
recycling, is eligible if emissions are below the thresholds described above.
Mitigation measures are eligible when they are incorporated into a single
investment plan within a specified time frame (5 or 10 years) that describes how
each of the measures, in combination with others, allows the defined threshold to
be met.
Amber Either of the following:
(transition)
 The facility has been designed to implement and is implementing all
necessary processes to meet criteria for green category by 2030.
 From the onset of its operations, the facility is using carbon capture, use,
and storage that captures at least 20 percent of emissions.
And
 The facility has a transition plan aligned with the 1.5°C target of the Paris
Agreement.
Ineligible Facilities or measures in which:
 The energy source is 100 percent coal or other fossil fuels and has no
transition plan to switch to sustainable energy sources.
 Coal is used for on-site electricity generation.
 Dedicated crops, primary organic streams, and wood are used as
biomass or as a reducing agent or for energy generation.

24
 Carbon capture, use, and storage for production of products that release CO2
immediately when they are used (e.g., urea, carbonated beverages, fuels) or for
enhanced oil recovery and production of other forms of fossil energy sources.

DNSH Requirements
All investments related to manufacturing of basic iron and steel plants must comply with the
country's regulations regarding environmental protection.
Sustainable use and protection of water resources
 Comply with wastewater regulations and environmental permits necessary for the economic
activity development.
 Control emissions of hydrocarbons and suspended solids in water.
 Control waste and products from coke and smelting operations, including tar and benzole.
Pollution prevention and control
 Control air emissions from coke manufacturing and smelting operations, especially
particulate matter (dust), nitrogen oxides, sulfur dioxide, carbon monoxide, chlorides,
fluorides, volatile organic compounds, polycyclic aromatic hydrocarbons, dibenzo-dioxins,
polychlorinated furans, and heavy metals.

Sector Manufacturing
Activity M4. Manufacture of aluminum
ISIC/PSIC C2420
Description GHG emissions produced by aluminum manufacturing are primarily related to
intensive energy consumption. Therefore, decarbonization of this sector can
mainly occur by using low-carbon electricity, resulting in fewer direct emissions.
Manufacture of aluminum activity is designed to provide criteria related to primary
and secondary aluminum manufacturing. In addition, aluminum recycling
contributes substantially to climate change mitigation because it has much lower
emissions than primary production.
Objective Climate change mitigation
Methodology Criteria
Green The activity must meet any of the following criteria.
 Manufacture of secondary aluminum (production of aluminum from
recycled aluminum)
 GHG emissions for primary aluminum production of 1.5 tCO2e/t or less
 Electricity consumption for electrolysis of 15.3 MWh/t of aluminum or less
 Average carbon intensity of electricity used for primary aluminum
production (electrolysis) of 100 g of CO2e/kWh or less (threshold defined
in the energy sector for electricity generation, subject to periodic updates)
Mitigation measures are eligible if they are incorporated into a single investment
plan within a specified timeframe (5 or 10 years) that describes how each of the
measures, in combination with others, will meet the defined threshold.
Amber Amber category is applicable until 2035; all eligible decarbonization measures
(transition) must be implemented before 2035.
Criteria: Decarbonization measures that enable the facility to increase the share
of renewable energy that it uses. Criteria are applicable within a production
facility where the company has a transition plan aligned with 1.5°C.

25
Ineligible N.A.

DNSH Requirements
Pollution prevention and control
 Control emissions of: perfluorocarbons, fluorinated gases, polycyclic aromatic hydrocarbons,
particles (e.g., unused cryolite), and short-lived climate pollutants such as black carbon that
have significant health impacts.
 Monitor hydrogen fluorides that can be toxic to vegetation.
 Control dissolved fluorides and cyanides from spent pot lining material that can have
significant environmental impacts, including contamination of groundwater and local water
bodies.
 Ensure that emissions from the production process are within emissions levels associated
with best available techniques.

Sector Manufacturing
Activity M5. Manufacture of plastics in primary form
ISIC/PSIC C2013
Description Manufacture of plastics is associated with significant CO2 emissions during its
lifecycle. Many types of plastics are used to produce multiple end products. The
taxonomy seeks to avoid including production of products that do not mitigate
GHG emissions; disposable plastic products undermine efforts to achieve this
goal. In this context, plastic manufacturing should be considered eligible when at
least 90 percent of the final plastic is not used for single-use consumer products,
with single-use plastics understood to be those designed to be discarded after
being used once without considering their potential for reuse (e.g., plastic
beverage bottles, food wrappers, bottle caps, plastic bags). This must be
confirmed through research and scientific studies, among other methods.
Objective Climate change mitigation
Methodology Criteria
Green The activity complies with one of the following criteria.
 Plastic in primary form is fully manufactured using mechanically recycled
plastic waste.
 If mechanical recycling is not technically feasible or economically viable,
plastic in primary form is fully manufactured by chemically recycling
plastic waste and the lifecycle GHG emissions of the manufactured
plastic, excluding any calculated credits from production of fuels, are
lower than the lifecycle GHG emissions of the equivalent plastic in
primary form manufactured from fossil fuel feedstock. Lifecyle GHG
emissions are calculated using ISO 14067:2018 or ISO 14064-1:2018.
Quantified lifecycle GHG emissions are verified by an independent third
party
 The plastic is derived wholly or partially from renewable feedstock, and its
lifecycle GHG emissions are lower than the lifecycle GHG emissions of
equivalent plastic in primary form manufactured from fossil fuels. Lifecyle
GHG emissions are calculated using ISO 14067:2018 or ISO 14064-
1:2018. Quantified lifecycle GHG emissions are verified by an
independent third party.
Note: Fuel feedstock: Lifecycle GHG emissions are calculated using ISO
14067:2018 or ISO 14064-1:2018. Quantified lifecycle GHG emissions (scopes 1

26
 and 2) are verified by an independent third party and food or feed crops are not
used as bio-based feedstock for the manufacture of plastic in primary form.
The activity must also meet the following criterion.
 At least 90 percent of the produced plastic must not knowingly be used for
single-use consumer products.
Amber N.A.
(transition)
Ineligible Plastic manufactured for single-use consumer products is not eligible.
Examples of some single-use products:
 Plastic bags used for packaging, carrying, or transporting packages and
goods, except for reusable or industrial-use bags.
 Plastic bags used to pack newspapers, magazines, advertisements, and
Utility bills and in laundries to pack washed clothes.
 Rolls of empty bags in commercial establishments for packaging,
carrying, or transporting packages and goods or carrying bulk food,
except for raw animal products.
 Plates, trays, knives, forks, spoons, cups, and gloves used for eating.
 Drink stirrers and straws.

DNSH Requirements
Pollution prevention and control
 Process emissions are within emission levels associated with best available techniques and
comply with regulations.

Sector Manufacturing
Activity M6. Manufacture of batteries
ISIC/PSIC C2720
Description Manufacture of rechargeable batteries; battery packs and accumulators for
transport or stationary, on-grid, or off-grid energy storage; and other industrial
applications; manufacture of respective components (battery active materials,
battery cells, casings, electronic components)
Objective Climate change mitigation
Methodology Criteria
Green The activity complies with one of the following criteria:
 The economic activity includes the manufacture and repurpose of
rechargeable batteries, battery packs and accumulators (and their
respective components), including from secondary raw materials, that
result in substantial GHG emission reductions in transportation, stationary
(provided to the grid), on grid and off-grid energy storage, and other
industrial applications.
 The economic activity recycles end-of-life batteries, including battery
imports.

27
Amber N.A.
(transition)
Ineligible N.A.

DNSH Requirements
Pollution prevention and control
 Ensure emissions to air, water, and soil are prevented or minimized per international and
national standards (e.g., IFC Environmental, Health, and Safety Guidelines: Air Emissions
and Ambient Air Quality; ISO 14001:2015 Environmental Management Systems—
Requirements with Guidance for Use; Strategic Approach to International Chemicals
Management; ISO 11014:2009(en) safety data sheet for chemical products).
 Implement and adhere to a recognized environmental management system (e.g., 14001,
eco-management and audit scheme).
 Identify and manage risks related to water quality and consumption at the appropriate level.
 Ensure that battery import is not banned under the Basel Convention on the Control of
Transboundary Movements of Hazardous Wastes and their Disposal.
Promotion of circular economy
 Reuse and recycle batteries and electronics (in particular, critical raw materials therein) in
accordance with the waste hierarchy.
 Implement measures concerning waste management to minimize and manage waste and
material use, especially hazardous manufacturing waste per international standards and
guidelines (e.g., King Abdullah Petroleum Studies and Research Center guide to circular
economy; French standard XP X30-901, Circular Economy—Circular Economy Project
Management System; ISO/TC 323 (in development Scenario 2); ISO/AWI 59014, Secondary
Materials—Principles, Sustainability and Traceability Requirements; Global Recycled
Standard [a voluntary product standard for tracking and verifying content of recycled
materials in a final product]; Strategic Approach to International Chemicals Management; ISO
11014:2009(en), Safety Data Sheet for Chemical Products; Energy Technology Perspectives
Clean Energy Technology Guide).
 Ensure that water use and conservation management plans have been developed in
consultation with relevant stakeholders and implemented according to international standards
and guidelines (e.g., United Nations Environment Program International Water Quality
Guidelines for Ecosystems; ISO 13.060: Water Quality).

Sector Manufacturing
Activity M7. Manufacture of renewable energy technologies
ISIC/PSIC C2710, C2720, C3510
Description Manufacture of components used in renewable energy technologies
Objective Climate change mitigation
Methodology Criteria
Green Manufacture of the following components, products, technologies, and equipment
is considered eligible.
Renewable energy

28
  Manufacture of essential products, components, and machinery that
support eligible renewable energy technologies that promote the
electricity supply sector. This also applies to supply chain of energy-
generation technologies or facilities included in the energy sector of the
taxonomy (e.g., solar, wind, bioenergy).
High-efficiency energy savings
 Manufacture of high-efficiency energy-saving household appliances such
as energy-saving air conditioners, electric washing machines, other
machines that comply with National Energy Efficiency and Conservation
Authority energy ratings. Companies that manufacture products with a top
energy-efficiency rating can be considered green.
 Manufacturing of high-efficiency energy-saving heat pump units and
modular air conditioners (see activity M9).
Amber N.A.
(transition)
Ineligible N.A.

DNSH Requirements
Transition to circular economy
The activity adopts techniques that support:
 Reuse and use of secondary raw materials and reused components in manufactured
products
 Design for high durability, recyclability, easy disassembly, and adaptability of manufactured
products
 Waste management that prioritizes recycling over disposal in the manufacturing process
 Information and traceability of substances of concern throughout the lifecycle of
manufactured products

Sector Manufacturing
Activity M8. Manufacture of low-carbon technologies for transportation
ISIC/PSIC C2811, C29, C30
Description Manufacture of low-carbon vehicles and their respective key components, fleets
and vessels meeting the criteria set out in the taxonomy, specifically in the
transportation sector
Objective Climate change mitigation
Methodology Criteria
Green Sustainable transportation
 Manufacture of electric or hybrid vehicles and their components with zero or
low emissions
 Manufacture of zero-emission micromobility systems (e.g., hydrogen, fuel
cell, electricity)
 Manufacture of urban, suburban, and interurban passenger fleets with zero
direct emissions (e.g., light rail, metro, tram, trolley, bus, railway)
 Manufacture of vehicle fleets or rolling stock for private service transport with
zero direct emissions
 Manufacture of railway fleets: trains with zero direct emissions

29
  Manufacture of inland waterway or maritime transportation: electric or hybrid
watercraft, based on biofuel
Amber N.A.
(transition)
Ineligible N.A

DNSH Requirements
Promotion of circular economy
The activity adopts techniques that support:
 Reuse and use of secondary raw materials and reused components in manufactured
products
 Design for high durability, recyclability, easy disassembly, and adaptability of manufactured
products
 Waste management that prioritizes recycling over disposal in the manufacturing process
 Information about and traceability of substances of concern throughout the lifecycle of
manufactured products

Sector Manufacturing
Activity M9. Manufacture of energy-efficient equipment for buildings
ISIC/PSIC C2740, C2750
Description Manufacture of low-carbon technologies and their key components to achieve
energy efficiency in buildings, demonstrating greater reductions in GHG
emissions than alternative technologies or products with better performance and
solutions available in the market
Objective Climate change mitigation
Methodology Criteria
Green Efficient and smart buildings
Manufacture of these products for energy-efficient equipment in buildings and
their key components is eligible, considering thresholds where applicable.
 Elements of building management systems that include automation,
monitoring, and control equipment and applications for temperature, energy,
and water
 High-efficiency windows (U-value >0.7 W/m²K)
 High-efficiency doors (U-value >1.2 W/m²K)
 Insulation products with low thermal conductivity (lambda <0.045 W/mK)
 External cladding with a U-value less than 0.5 W/m²K and roofing systems
with a U-value less than 0.3 W/m²K
 Appliances with high-efficiency labels according to National Energy Efficiency
and Conservation Authority energy ratings (e.g., water heaters, washing
machines, electric stoves, air conditioners, cooling and heating systems)
 High-efficiency lighting devices and public lighting systems using state-of-the-
art light-emitting-diode (LED) lamps
 Presence of and daylight controls for lighting system automation
 Heat pumps
 Facade and roofing elements with sun protection or control function, including
those that support vegetation growth
 Energy-efficient building automation and control systems for commercial
buildings

30
  Thermostats and zonal devices for smart monitoring of major electricity loads
for residential buildings and detection equipment (e.g., motion control)
 Products for heat measurement and thermostatic controls for individual
homes connected to district cooling systems and individual floors connected
to central cooling systems that serve an entire building
Amber N.A.
(transition)
Ineligible N. A

DNSH Requirements
Promotion of circular economy
The activity adopts techniques that support:
 Reuse and use of secondary raw materials and reused components in manufactured
products
 Design for high durability, recyclability, easy disassembly, and adaptability of manufactured
products
 Waste management that prioritizes recycling over disposal in the manufacturing process
 Information about and traceability of substances of concern throughout the lifecycle of
manufactured products

Sector Manufacturing
Activity M10. Manufacture of other low-carbon technologies
ISIC/PSIC N.A.
Description Manufacture of regulated goods that meet the highest performance level for a
given good in energy rating system introduced by the Environmental Protection
Agency of Pakistan or internationally available equivalent
Objective Climate change mitigation
Methodology Criteria
Green Manufacturing of regulated goods that meet the highest performance level for a
given good in energy rating system introduced by National Energy Efficiency and
Conservation Authority energy ratings or internationally available equivalent

Amber N.A.
(transition)
Ineligible N.A.

DNSH Requirements
The activity adopts techniques that support:
 Reuse and use of secondary raw materials and reused components in manufactured
products
 Design for high durability, recyclability, easy disassembly, and adaptability of manufactured
products
 Waste management that prioritizes recycling over disposal in the manufacturing process
 Information about and traceability of substances of concern throughout the lifecycle of
manufactured products

31
 Sector Manufacturing
Activity M11. Manufacture of textiles
ISIC/PSIC C1311, C1312, C1313, C1391, C1393, C1399, C1410, C1430, C1520
The activity does not include C1420, C1511, C1512, C2826, C4641, C4751,
C4771
Description Manufacture of fabrics and garments that meet internationally recognized
standards on sustainable production and manufacture
Objective Climate change mitigation
Methodology Criteria
Green Activity is eligible if it meets the following criteria.
 GHG emissions less than 100g CO2e/kWh for energy used for the
manufacturing process
 Input of at least 30 percent recycled material or fibers from sustainable
sources (verified by any sustainability certification such as the Better
Cotton Initiative or that meets the criteria of the agricultural sector of the
taxonomy) into final product or materials with a Higg Material
Sustainability Index of less than 25 for apparel5
Sustainable textile certifications in the market: certifications such as Global
Organic Textile Standard, Oeko Tex, Waste and Resource Action Programme,
and the Better Cotton Initiative that demonstrate the above technical screening
criteria related to energy and material use are eligible.
Amber Input of at least 15 percent recycled material or fibers from sustainable sources
(transition) (verified by any sustainability certification or that meets the criteria of the
agricultural sector of the taxonomy) into final product or materials with a Higg
Material Sustainability Index of less than 40 for apparel6
Ineligible N.A.

DNSH Requirements
Pollution prevention and control
 100 percent of wastewater is treated in a treatment plant to dispose properly of effluent waste
generated by dyeing and water recycling in the manufacturing process. Treated wastewater
must meet applicable environmental standards. (see water sector)
 End product is proven free of harmful levels of toxic substances, such as by Oeko Tex
Certification (Standard 100 label).

5 The Higg Material Sustainability Index considers factors such as global warming, eutrophication, water scarcity, fossil fuels, and chemistry
(https://howtohigg.org/higg-msi/; https://www.ifc.org/content/dam/ifc/doc/2023/strengthening-sustainability-in-the-textile-
industry-ifc-2023.pdf; https://www.kymo.de/en/blog/how-sustainable-are-textiles-a-comparison-using-the-higg-material-
index#most-sustainable-materials).
6 The Higg Material Sustainability Index considers factors such as global warming, eutrophication, water scarcity, fossil fuels, and chemistry

(https://howtohigg.org/higg-msi/; https://www.ifc.org/content/dam/ifc/doc/2023/strengthening-sustainability-in-the-textile-
industry-ifc-2023.pdf: https://www.kymo.de/en/blog/how-sustainable-are-textiles-a-comparison-using-the-higg-material-
index#most-sustainable-materials).

32
  To control or reduce microplastic pollution during the fabrication phase, advanced filtration
systems are installed in textile manufacturing plants to capture microplastics before
wastewater is discharged.

Sector Manufacturing
Activity M12. Manufacture of bricks
ISIC/PSIC C2392
Description Brick kilns with substantially greater lifecycle GHG emission savings than best-
performing alternative technology, product, or solution available on the market7 8
Objective Climate change mitigation
Methodology Criteria
Green Activity criteria
An activity is eligible if meets one of the following criteria:
 GHG emissions depending on type of kiln used
o Zig-zag: 83 gCO2/kg of fired brick (20 percent vs. the baseline of
Climate and Clean Air Coalition=103)
o Vertical shaft brick 56 gCO2/kg of fired brick (20 percent vs. the
baseline of Climate and Clean Air Coalition=70)
 Fixed chimney Bull's trench kilns and down-draught kilns should be
replaced with zig-zag, vertical shaft brick (APN n.d.), or other cleaner kiln
technology.
Or
 Energy used for the manufacturing process has GHG emissions of less
than 100g CO2e/kWh.
 Efficiency upgrade criteria
o Increase in resource or materials efficiency of 40 percent based
on 2024 baseline
o Measures that reduce direct-process GHG emissions by 40
percent based on 2024 baseline (to net zero by 2050)
Eligible measures
A user may also use the follow green measures criteria to identify eligible capital
expenditures:
Fuel switching
Replacement of coal with low-carbon alternative (e.g., low-carbon
hydrogen as defined under the energy sector)
Process
 Installation of infrastructure to use input for raw materials such as:
o Plastic waste into materials

7
It is estimated that 82.5 billion fired bricks were produced in 2018 in various sorts of kilns using various types of fuels and fuel mixes such
as indigenously produced lignite coal, rice husks and other agricultural residue, rubber tires, plastics, and industrial waste that produce
highly toxic gases. It is estimated that 13 tonnes of coal is consumed for firing bricks, with coal fulfilling 70 percent of energy needs, and
biomass fulfilling 30 percent. There are an estimated 18,000 to 20,000 brick kilns in Pakistan, most of which use fixed chimney Bull's trench
kiln technology; 150 use zig-zag technology. Zig-zag kilns have been given significant importance in the context of NDCs, meaning that
this technology has been proven to reduce GHG emissions, so it supports the compliance of the NDCs and made part of the National Action
Plan for Sustainable Energy for All [49].
8
Approximately 46 million bricks are produced per year in Pakistan in more than 6,000 brick kilns. Approximately 533,019 tonnes of
untreated GHGs are emitted from these annually (Nazir et al. 2010).

33
 o Fly ash waste
o Waste glass powder
Research and development related to alternative processes and technologies for
manufacturing are eligible as the relate to:
 New low-emission kilns
 Use of alternative lower-carbon non-fossil fuels
 Energy-efficiency upgrades to zig-zag and vertical shaft kilns

Amber Process switching

(transition)
 Switch from traditional brick kiln technologies to:
o Zig-zag
o Vertical shaft brick
o Fixed chimney Bull's trench (30 percent by weight fly ash addition)
Blending low-carbon hydrogen (as defined in the energy sector) would be a
transitional step from the current natural gas economy to a future hydrogen
economy.
Ineligible Facilities or measures in which:
 The energy source is 100 percent coal or other fossil fuel, and there is no
transition plan to switch to a sustainable energy source.
 Coal is used for on-site electricity generation.

DNSH Requirements
Pollution prevention and control
 The project should comply with the National Environmental Quality Standards (NEQS)
(2000), with a maximum allowable concentration for 16 parameters (pollutants) in gaseous
emissions from industrial sources.
Promotion of circular economy
 At least 20 percent of the input material comes from recycled materials such as plastic waste,
fly ash waste, and waste glass powder.

Sector Manufacturing
Activity M13. Research and development—professional services
ISIC/PSIC N.A.
Description Research, development, and innovation activities in the manufacturing sector that
reduce the environmental impact of the economic sector
Objective Climate change mitigation
Methodology Criteria

Green Creation of intangible assets, research, development, and innovation activities to

promote compliance with the substantial contribution criteria of the taxonomy in
the sector

34
Sector Manufacturing
Activity M14. General guidance for other manufacturing industries
ISIC/PSIC N.A.
Description For industries that do not have a specific activity within the taxonomy, compliance
with climate change mitigation objectives is assessed by analyzing use of funds
for the specific activity under evaluation for financing.
Objective Climate change mitigation
Methodology Criteria
Green Although energy efficiency is a technological intervention and constitutes
improvement in energy performance or reduction in energy consumption, it does
not necessarily indicate a substantial contribution to climate change mitigation.
Therefore, it is crucial to verify whether measures designed to increase energy
efficiency substantially improve the performance of an activity (e.g., assessment
of changing machinery to technologies with lower emissions or energy
consumption). The taxonomy addresses the concept of energy efficiency through
the substantial contribution criteria for activities in various sectors.
An activity considered to be an energy-efficiency measure must demonstrate that
overall performance levels in terms of energy intensity or carbon intensity
achieved by using such measures are within the limits established under the
technical substantial contribution criteria.
Energy-efficiency measures in activities that hinder the taxonomy's objectives are
not eligible (e.g., energy efficiency measures applied to machinery that generates
energy from fossil fuels).
Activities of some industries in the sector are listed below, along with the impacts
they have on renewable and non-renewable resources, their contribution to
energy or carbon intensity, and their relationship with other productive sectors of
the taxonomy.
Food and beverage industry
Examples of associated impacts
 Impacts on raw material acquisition (subject to type of manufacturing)
 Impacts related to high emissions generation and energy consumption in
food manufacturing processes (acquisition of raw materials for
subsequent treatment, processing, preparation, preservation, packaging,
transportation)
 Discharge into water bodies and odor generation in industrial processes
Related sectors under the taxonomy
 Raw material acquisition may base its procurement criteria on the
definition established in the agricultural, forestry, aquaculture, and fishing
sectors.
 Energy used in the facility must comply with requirements stipulated in the
electricity, gas, steam, and air conditioning supply sector (100
gCO2e/kWh or use of renewable sources).
 Discharges resulting from industrial processes in food manufacturing
must comply with the criteria of the corresponding activities under the
water sector.
 Vehicles used for transportation must comply with the criteria established
for corresponding activities in the transportation sector.

35
 Paper and cardboard
Examples of associated Impacts
 Impacts on raw material acquisition (subject to type of manufacturing)
 Impacts related to high emissions generation and energy consumption in
food manufacturing processes (acquisition of raw materials for
subsequent treatment, processing, preparation, preservation, packaging,
and transportation)
 High water consumption
 Discharge into water bodies and odor generation in industrial processes
Related sectors under the taxonomy
 For virgin raw materials, refer to practices defined in the forestry sector.
 When using recovered materials in manufacturing, refer to requirements
of waste management sector.
 Energy used in the facility must comply with requirements stipulated in the
electricity, gas, steam, and air conditioning supply sector (100
gCO2e/kWh or use of renewable sources).
 Water management and treatment must comply with criteria established
in water supply and treatment sector.
Discharge resulting from industrial processes in food manufacturing must comply
with criteria of water supply and treatment sector (wastewater and sewage).

Transportation
GHG emissions from this sector account for 10.5 percent of total CO2e emissions in the country, 68
percent of which is associated with cars and light trucks, encompassing emissions from catalytic
converter–equipped and non-catalytic converter–equipped vehicles [39]. Transportation also directly
affects air quality, especially in urban areas. In 2022/23, the transportation and storage sector
accounted for 5.3 percent of the country's GDP [48].
Pakistan’s most recent First Biennial Update Report, recognizes that managing or curbing
emissions growth in the transportation sector is one of the most important challenges to overall
mitigation efforts and is crucial to addressing climate change. The government has introduced mass
transit programs in major cities such as Islamabad, Lahore, Peshawar, and Karachi that not only
provide public transportation facilities, but are also designed to reduce GHG emissions [49].
The activities developed under this sector are listed below.
Activity ISIC/PSIC Code
T1. Public transportation in urban and rural areas (passenger) H4911
T2. Micromobility (other passenger land transportation) H4922
T3. Interurban transportation (cargo and passengers) H4921
T4. Low-carbon transportation infrastructure H52
T5. Sea and coastal water transportation (cargo and passengers) H501
T6. Inland water transportation (cargo and passengers) H502
T7. Freight and passenger air transportation H5110, H5120, H51
T8. Research and development—professional services N.A.

36
The technical fact sheets for the selected activities are provided below.
Sector Transportation
Activity T1. Public transportation in urban and rural areas (passengers)
ISIC/PSIC H4921
Description Public transportation is a comprehensive system of different modes of
transportation, including buses, taxis, bicycles, trams, trolleys, trains, and water
vehicles. Because the transportation sector is an important source of GHG
emissions (CO2, methane, nitrous oxide), public transportation systems must
promote sustainable modes of transportation that integrate mobility systems with
the urban structure, enabling many passengers to be transported. In this sense,
urban public transportation must:
 Have more low- or zero-emission vehicles to increase the efficiency of
the system and have a smaller carbon footprint
 Be aligned with sectoral decarbonization plans and sustainable mobility
instruments or plans that adopt measures to reduce the impact of GHG
emissions
Objective Climate change mitigation
Methodology Criteria
Green The activity must meet one of the following criteria.
 Vehicle fleets for urban public transportation by land, rail, funicular or
cable car, river, or sea with zero direct emissions (e.g., electric or
powered by low-carbon hydrogen)
o Examples of urban land or rail public transportation fleet: rapid
transit buses, intermediate or feeder buses, light trains, subways,
trams, trolleys, commuter or suburban trains, taxis, shared private
vehicles, ride-sharing systems
o Examples of river or maritime transportation fleet: ferries, water
taxis
 Vehicle fleets for passenger transportation that use sustainable biofuels
and biomethane, guaranteed by technological design or by continuous
monitoring and verification by third parties to meet criteria for substantial
contribution. Ensure the use of transportation technologies that allow use
of B100 (biofuel).
It is essential to ensure that production and use of biofuels do not compromise
food security or energy availability.
Retrofitting or modifying the propulsion form of the fleet meets the criteria of
substantial contribution as long as it meets the emission threshold or are
transformed into vehicles with zero direct emissions.
Amber Land public transportation
(transition)
 Direct emissions less than 20 gCO2e/passenger-km until the end of 2030,
because the national target is that 30 percent of new vehicles in 2030
should be electric
 Diesel-hybrid buses with a minimum 20 percent greater efficiency than
conventional diesel buses until the end of 2030
Water transportation

37
 Until December 31, 2030, hybrid and double fuel ships that use at least 50
percent of their fuel energy with zero direct emissions of CO2 (measured in the
exhaust pipe) or plug-in energy for its normal operation.
Ineligible N/A.

DNSH Requirements
Sustainable use and protection of water resources
 Vehicles must be cleaned at sites designated for this task, making rational use of water
resources and avoiding wastewater discharge that does not comply with environmental
permits and authorizations.
Promotion of circular economy
 For battery-powered transportation, these measures include reuse and recycling of batteries
and electronic components, including the critical raw materials they contain.
 There must be a management plan that allows use and reuse of the fleet that is out of
circulation, in compliance with the corresponding regulations of the country regarding the
circular economy and solid waste management. The disused fleet must be disassembled in
compliance with environmental regulations such as the Hong Kong Convention, which
Pakistan ratified for the dismantling of ships.
 Certificates of final disposal of solid waste must be generated throughout the management
process of disused vehicles detailing the type of treatment provided according to the type of
waste.
 In the maintenance and management at the end of their lifespan of vehicles (dismantling),
ensure compliance with current national legislation on generation, management, and
treatment of hazardous waste.
Pollution prevention and control
 The vehicles must comply with the permissible limits for emissions (unburned hydrocarbons,
carbon monoxide, CO2), and opacity for engine (combustion) vehicles.
 In addition to meeting the target for direct CO2 emissions, vehicles must meet standards that
the Pakistan Environmental Protection Act (PEPA), 1997 set on permissible limits for
pollutants emitted by motor vehicles, such as carbon monoxide, hydrocarbons, nitrogen
oxides, and particulate matter.
 In relation to direct emissions to the air from exhaust gases of internal combustion engines
(nitrogen oxides, total hydrocarbons, hydrocarbons other than methane, carbon monoxide,
material particulate matter), buses must comply with the current Euro V standard or higher.
 If there is no standard regarding maximum permitted noise levels, compliance with one of
these international standards is suggested.
o ISO 13.040.50: Emissions from mobile sources
o ISO 362: Measurement of noise emitted by road vehicles during acceleration
o ISO 28580:2018:- Method of measuring rolling resistance of tires for passenger
cars, trucks, and buses

Sector Transportation
Activity T2. Micromobility (other land transportation)
ISIC/PSIC H4922
Description Micromobility refers to transportation in small, light vehicles that usually operate
at speeds of less than 25 km/h and are ideal for trips of up to 10 km [50]. They
can be human or electric powered and be used individually or shared by several

38
 people. Current micromobility solutions include mopeds, bicycles, skateboards,
hoverboards, roller skates, e-scooters, e-skateboards, gyroboards, and other
small means of transportation, which are normally electric and, because of their
technical, functional, and environmental characteristics, are good candidates for
environmentally sustainable transportation solutions.
Objective Climate change mitigation
Methodology Criteria
Green Any freight or passenger micromobility fleet or system that has direct zero
emissions is directly eligible.
Amber N.A.
(transition)
Ineligible N.A.

DNSH Requirements
There are no specific requirements for this activity.

Sector Transportation
Activity T3. Interurban transportation (cargo and passengers)
ISIC/PSIC H4921
Description Interurban transportation refers to the movement of goods or passengers
between urban centers. GHG emissions can be decreased by:
 Increasing the number of low- and zero-emission vehicles and vehicle
efficiency
 Substituting sustainable alternative fuels and fuels with net-zero carbon
emissions for fossil fuels
Objective Climate change mitigation
Methodology Criteria
Green Interurban transportation is eligible if it meets one of the following criteria.
 The fleet of vehicles or rolling stock intended for intermunicipal
transportation, whether for cargo or passengers, for road and rail
transportation, has zero direct emissions .
 It consists of vehicles or rolling stock, whether for cargo or passengers,
that uses sustainable biofuels and biogas, whose use is guaranteed by
technological design or by continuous monitoring and third-party
verification.
Vehicles that allow for the use of 100 percent biofuels are automatically eligible.
Amber By 2030, any fleet of vehicles intended for interurban transportation, whether for
(transition) cargo or passengers, that are hybrid are eligible. Diesel hybrids must
demonstrate at least 20 percent lower CO2 emissions than conventional diesel

39
 vehicles. The target of 30 percent electric vehicles is set at the national policy
level.
Vehicles that allow for use of biofuel mixture of any percentage until 2030 are
eligible, after which vehicles must meet the Green criteria.
Ineligible Vehicles or rolling stock based on fossil fuels or fossil fuel blends with alternative
fuels and vehicles transporting such fuels are not eligible.

DNSH Requirements
Pollution prevention and control
 Maintenance and end-of-life management of vehicles must comply with regulations on
integrated waste or hazardous waste management.
 Activities must comply with permissible limits for air emissions (unburned hydrocarbons,
carbon monoxide, CO2, opacity) for combustion motor vehicles according to applicable local
regulations.
 Regarding direct emissions to the air from internal combustion engine (nitrogen oxides, total
hydrocarbons, non-methane hydrocarbons, carbon monoxide, particulate matter), vehicles
must comply with the current Euro VI standard or higher.
Promotion of circular economy
 Ensure that measures have been taken to manage waste according to type during the use
phase (maintenance) and at the end of the fleet's life, including reuse and recycling of
batteries and electronic devices (especially critical raw materials that they contain).
Sector Transportation
Activity T4. Low-carbon transportation infrastructure
ISIC/PSIC H52
Description Low-carbon infrastructure generates less CO2 than possible alternative
infrastructure for providing specific transportation services under national
regulatory conditions. Actions aimed at construction, rehabilitation, operation, and
maintenance of low-carbon transportation infrastructure are eligible because they
are crucial for promoting and enabling sustainable, efficient means of
transportation. Therefore, sustainable infrastructure should be climate resilient,
socially inclusive, technologically advanced, productive, and flexible.
This activity includes infrastructure, machinery, and equipment designed to
promote sustainable modes of transportation and computer equipment for
providing control services and maintenance facilities.
Objective Climate change mitigation
Methodology Criteria
Green The activity is eligible if it meets one of the following criteria.
 It is infrastructure required for zero-emission transportation (e.g., electric
charging points, upgrades to the electric grid connection, hydrogen fueling
stations, electric highways).
 It is infrastructure, machinery, and equipment (including fleets) for active
micromobility (e.g., pedestrian, bicycle, scooters), for example, reshaping
road profiles to increase pedestrian areas and bike lanes, micromobility
systems in general, urban equipment for public shared micromobility
system stations, consolidation points and urban distribution of last-mile
goods in micromobility systems and (cross-docking, secure parking for
micromobility at public transport stations), if the vehicle fleet or modes of

40
 transportation using the infrastructure meet the thresholds for direct
emissions as defined in activity T2.
 It is infrastructure, machinery, and equipment required to upgrade existing
facilities or vehicles to ensure compliance with stricter emissions
standards (e.g., upgrading engines, replacing parts to adapt to low carbon
fuels)
 Non-electrified railway infrastructure with an existing plan for
electrification or use of trains with alternative engines
 Multimodal logistics infrastructure: infrastructure for low-carbon logistics
and freight transport with development of logistics consolidation and
distribution centers, infrastructure for low-emission logistics corridors
(e.g., rail and waterway corridors) and logistics platforms that connect
road, rail, and waterway, supporting efficiency in freight transportation and
reducing GHG emissions
 Infrastructure for the supply of sustainable biofuels and green hydrogen
 Technological infrastructure and platforms for mobility as a service in
cargo and passenger transportation
 Maintenance and repair of low-emission vehicles that meet the energy
criteria under the taxonomy (e.g., electric, hydrogen, hybrid)
Amber N.A.
(transition)
Ineligible Infrastructure dedicated to transportation of fossil fuels or blended fossil fuels is
not eligible.

DNSH Requirements
Promotion of circular economy
 Reusing parts and using recycled materials during renovation, improvement, and
construction of infrastructure
 Ensuring that at least 20 percent (by weight) of non-hazardous construction and demolition
waste generated on site is prepared for reuse, recycling, and other types of material
recovery. Rates should increase to 40 percent by 2025, 60 percent by 2028, and 70 percent
by 2030.
 Having a circular economy plan that demonstrates the prioritization of low-carbon materials,
sustainable materials, and the usage plan
Pollution prevention and control
 Minimizing noise and vibrations caused by use of infrastructure (e.g., introducing open
trenches and wall barriers)
Sustainable use and protection of biodiversity and ecosystems
 Avoiding fragmentation and degradation of natural and urban landscapes and risks of road
incidents or accidents and wildlife accidents caused by collisions
 Preventing potential harm to aquatic ecosystems caused by tunnels that may change and
degrade hydro-morphological conditions of water bodies
 Monitoring and protecting urban ecosystems, particularly public spaces, urban green areas,
and urban tree cover

Sector Transportation
Activity T5. Sea and coastal water transportation (cargo and passengers)
ISIC/PSIC H501

41
Description Sea and coastal transportation is used to move cargo and passengers and can
be national and international. The purpose of the activity is to demonstrate a
substantial reduction in GHG emissions by:
 Increasing the number of low- and zero-emission floating vessels and
increasing fleet efficiency
 Increasing the substitution of sustainable alternative fuels with net-zero
carbon emissions for fossil fuels
 Increasing the overall efficiency of the transportation and mobility system
Objective Climate change mitigation
Methodology Criteria
Green Maritime transportation is eligible if it meets any of the following requirements.
 Zero-direct-emission vessels are directly eligible.
 Vessels using alternative fuels such as green hydrogen (meeting the
taxonomy threshold), including its derivatives such as green ammonia,
methanol, and biogas or biofuels, whose use is guaranteed by
technological design or continuous monitoring and verification by third
parties, are eligible.
 Auxiliary vehicles for maritime transportation with zero direct CO2
emissions or alternative fuels such as green hydrogen (meeting the
taxonomy threshold), including its derivatives such as green ammonia,
methanol, and biogas or biofuels, guaranteed by technological design or
continuous monitoring and verification by third parties, are eligible.
International maritime transport vessels must meet the following criteria when
applicable.
 The provisions of Chapter 4 of Annex VI of the International Convention
for the Prevention of Pollution from Ships of the International Maritime
Organization. This annex defines the rules for achieving the objective of
reducing the carbon intensity of international maritime transport and
advancing toward the levels of ambition established in the International
Maritime Organization Initial Strategy on the Reduction of Greenhouse
Gas Emissions from Ships (increasing the performance).
o The Projected Energy Efficiency Index and Applicable Energy
Efficiency Existing Ship Index must be calculated for all new ships,
existing ships, and those that have undergone significant
modifications in accordance with guidelines that the International
Maritime Organization has developed.
o New and existing ships must carry on board a ship energy-
efficiency management plan that establishes a mechanism for
increasing energy efficiency using operational measures.
o All operators of ships with a gross tonnage of 5,000 tonnes or
more must collect and report data on fuel consumption in
accordance with Appendix IX of Annex VI of the International
Convention for the Prevention of Pollution from Ships.
All ships with a gross tonnage of 5,000 or more must calculate the annual
operational carbon intensity indicator and, when required, formulate a plan for
corrective measures, considering International Maritime Organization guidelines
[51].
Amber Other river vessels are eligible if direct emissions (measured at the exhaust pipe)
(transition) of grams of CO2 per tonne-kilometer, calculated (or estimated in the case of new
ships) using the Energy Efficiency Operational Index, are 50 percent lower than

42
 the reference average value for CO2 emissions defined for heavy-duty vehicles.
This alternative is optional when it is not technologically and economically
feasible to meet the green criteria and will be allowed until December 31, 2030.
Ineligible Vessels dedicated to transportation of fossil fuels are not eligible.

DNSH Requirements
Promotion of circular economy
 Define measures to manage waste in the use phase and at the end of the vessel's life
according to the waste hierarchy, including control and management of hazardous materials
on board vessels and ensuring their safe recycling.
 Have a management plan that allows use and reuse of the fleet that is out of circulation, in
compliance with corresponding national regulations regarding circular economy and solid
waste management. The disassembly of the disused fleet must comply with standards of the
Hong Kong International Convention for the Safe and Environmentally Sound Recycling of
Ships, which Pakistan ratified in 2023.
 For ships powered by batteries, these measures include reuse and recycling of batteries and
electronic components, including critical raw materials they contain.
Pollution prevention and control
 Vessels must comply with emission limits established in related regulations.
 Ships operating with marine diesel engines must comply with certifications and recognitions
that ensure that they do not pollute the atmosphere.
 All deliberate emissions of substances that deplete the ozone layer are prohibited, as well as
ships containing substances that deplete the ozone layer.
 Ships with systems or equipment containing substances that deplete the ozone layer must
have an International Air Pollution Prevention Certificate and maintain a record of such
substances.
 Apply a control strategy of sulfur oxide and particulate matter emissions from fuel oil used or
transported for use on board the ship. Control measures include procedures for fuel oil
change, fuel oil sampling, and sulfur content control, which must have a limit of 0.50 percent
m/m.
 At points and terminals (docks, port, harbor) defined by local regulations, tankers, gas
carriers, and crude oil–carrying ships must carry and implement a volatile organic
compounds management plan that the appropriate authority has approved.

Sector Transportation
Activity T6. Inland water transportation (cargo and passengers)
ISIC/PSIC H502
Description Transportation of passengers, freight, or cargo via rivers, canals, lakes, and other
inland waterways, including inside harbors and ports. This activity also includes
rental of pleasure boats with crew for inland water transportation.
Objective Climate change mitigation
Methodology Criteria
Green Inland transportation is eligible provided it meets any of the following
requirements.
 Vessels that have zero direct tailpipe CO2 emissions
 Vessels using alternative fuels such as green hydrogen (meeting the
taxonomy threshold), including its derivatives such as green ammonia,

43
 methanol, and biogas or biofuels, guaranteed by technological design or
continuous monitoring and verification by third parties
Amber For freight inland water transportation, the activity complies with the following
(transition) criterion.
 Until 2030, vessels with direct tailpipe emissions do not exceed 28.3
grams of CO2 per tonne-kilometer.
Ineligible Vessels dedicated to fossil fuel transport are not eligible.

DNSH Requirements
Promotion of circular economy
 Define measures to manage waste in the use phase and at the end of the vessel's life
according to the waste hierarchy, including control and management of hazardous materials
on board vessels and ensuring their safe recycling.
 Have a management plan that allows use and reuse of the fleet that leaves circulation in
compliance with the corresponding national regulations regarding circular economy and solid
waste management. Disassembly of the disused fleet must comply with standards of the
Hong Kong International Convention for the Safe and Environmentally Sound Recycling of
Ships, which Pakistan ratified in 2023.
 For ships powered by batteries, these measures include reuse and recycling of batteries and
electronic components, including critical raw materials they contain.
Pollution prevention and control
 Ships operating with marine diesel engines must comply with certifications and recognitions
that ensure that they do not pollute the atmosphere.
 All emissions of substances that deplete the ozone layer are prohibited, as well as ships
containing substances that deplete the ozone layer.
 Apply control of sulfur oxide and particulate matter emissions from fuel oil used or
transported for use on board the ship. Control measures include procedures for fuel oil
change, fuel oil sampling, and sulfur content control, which must have a limit of 0.50 percent
m/m.
 At points and terminals (docks, port, harbor) defined by local regulations, tankers, gas
carriers, and crude oil–carrying ships must carry and implement a volatile organic compound
management plan that the appropriate authority has approved.

Sector Transportation
Activity T7. Freight and passenger air transportation
ISIC/PSIC H5110, H5120, H51
Description Passenger air transportation
 Transportation of passengers by air over regular routes and on regular
schedules, charter flights for passengers, and scenic and sightseeing
flights
 Renting of air transportation equipment with operator for the purpose of
passenger transportation and general aviation activities such as
transportation of passengers by aero clubs for instruction or pleasure
Freight air transport

44
  Transportation of freight by air over regular routes and on regular
schedules, non-scheduled transportation of freight by air, launching of
satellites and space vehicles, space transportation
 Renting of air transportation equipment with operator for the purpose of
freight transportation
 Vehicles and equipment that support ground activities in airports
Objective Climate change mitigation
Methodology Criteria
Green Once the International Civil Aviation Organization develops a credible, science-
based, 1.5°C-aligned pathway, it will be reviewed for inclusion in the taxonomy.
Pending this development, the activity complies with the following criterion.
 Zero-exhaust CO2-emission aircraft such as those powered by electricity
or hydrogen meeting taxonomy criteria
Amber  Purchase or use of sustainable aviation fuel (SAF) have a substantial
(transition) contribution if it is used in the processes.
 Investments in manufacturing, infrastructure, and supply chains for
development of the SAF industry and activities that promote production
and adoption of SAF can be classified as Amber measures.
 Manufacturing, infrastructure, and supply chains for development of the
SAF industry can be classified as Amber only if they relate to SAFs that
meet the feedstock criteria.
SAF feedstock
 The International Civil Aviation Organization must recognize SAF
feedstock as eligible under the Carbon Offsetting and Reduction Scheme
for International Aviation or certified under European Union Renewable
Energy Directive 36.
The sunset date for stated criteria is 2030. Requirements for Amber measures
must be revised at the latest by 2030 to reflect the most recent developments in
the SAF technologies and their potential impact on decarbonization of aviation.
In addition, the criteria will be revised before 2030 when a credible, science-
based, 1.5°C-aligned pathway for SAF blending has been developed (e.g. by the
International Civil Aviation Organization).
Ineligible Air transport that uses 100 percent fossil fuels

DNSH Requirements
N.A.

Sector Transportation
Activity T8. Research and development—professional services
ISIC/PSIC N.A.
Description Research, development, and innovation in the transportation sector that reduce
the environmental impact of the sector
Objective Climate change mitigation
Methodology Criteria

45
 Green Creation of intangible assets and research, development, and innovation
activities that promote compliance with the substantial contribution criteria of the
taxonomy in the transportation sector are directly eligible.
Some intangible assets and research, development, and innovation activities that
enable substantial contribution to climate change mitigation are:
 Supervisory control and data acquisition systems that track energy use at
the component or equipment level to increase energy efficiency and
enable zero-emission vehicles
 Innovation in charging infrastructure for zero-emission vehicles
 Innovation in infrastructure and asset management [52]
o Smart infrastructure: Developing intelligent transportation systems
that use data analytics and the Internet of Things to optimize traffic
flow and reduce congestion
o Maintenance and sectorization: Implementing predictive
maintenance using artificial intelligence and machine learning to
extend the lifespan of infrastructure and reduce downtime
 Alternative fuels technology that enables zero-emission vehicles
 Advanced batteries and efficient motors that enable zero-emission
vehicles.

Energy
GHG emissions from the energy sector stem from the combustion of fossil fuel for electricity
generation (98.3 percent of the total) and petroleum refining (1.7 percent). Increasing energy
generation through renewable sources is a high priority in Pakistan, addressing the national supply
deficit. The International Energy Agency’s 2021 report indicated that, to be aligned with a 1.5°C
scenario, about 100 GW of coal-fired plants must be phased out globally from 2021 to 2030 [53].
This ambition level is a hard commitment for many countries, because coal retirement pledges refer
to plants that operate at or near the end of their full life span, those already sitting idle or long
overdue for decommissioning. The challenge is to align the ambition of the 1.5°C target of the Paris
Agreement with a strategy to fast-track the decommissioning and retirement of the plants that still
have a long remaining operational lifetime and remain economically competitive, which could be
because of lock-in of long-term contracts.
The National Transmission and Despatch Company Limited has prepared the Indicative Generation
Capacity Expansion Plan 2024-2034 and submitted it to the National Electric Power Regulatory
Authority for approval. It is expected that carbon emissions from power generation will decline from
340 g-CO2/kWh in fiscal 2024 to 209 g-CO2/kWh by fiscal 2034. The National Electricity Policy and
National Electricity Plan sets a target of 60 percent share of renewable energy–based generation
including hydropower by 2030.
The National Electricity Policy and National Electricity Plan lay out the long-term vision and plan for
decarbonization in the power sector, requiring a shift from current thermal dominant to renewable
energy dominant. Furthermore, Pakistan has outlined several initiatives to reduce the carbon
footprint of its electricity sector. An increase in grid flexibility through technological interventions,
automation, and enhanced forecasting capabilities at the national energy distribution grid is
promoted. The National Electricity Plan 2023 provides guidelines, implementation mechanisms, and
tools for realization of the National Electricity Policy goals for the power sector. The plan also sets
the target of 60 percent share of renewable energy–based generation, including hydropower, by
2030.
A framework for an early, managed phase-out of coal power plants is included under the energy
sector in the taxonomy. There is a lack of specific, universal criteria and thresholds associated with

46
each of the activities that are expected to enable the 1.5°C-aligned coal transition to be achieved,
so specific measures must be defined independently for each transition process for coal phase-out.
To decarbonize electricity generation, it is important to increase the efficiency and reliability of
energy generated from fossil fuels (as will be required during the transition period) while developing
and expanding adoption of low-carbon energy sources. The proposed activities are expected to
reduce direct emissions while maintaining energy grid reliability at affordable electricity prices.
Activity ISIC/PSIC
Code
E1. Energy from solar photovoltaic and concentrated solar power
D3510
(including electricity, heat, cool)
E2. Electricity generation from wind power D3510
E3. Electricity generation from hydropower D3510
E4. Geothermal energy generation (including electricity, heating, cooling) D3510
E5. Bioenergy power generation (including electricity, heating, cooling) D3510
E6. Electricity generation from ocean energy D3510
E7. Electricity generation from hydrogen or its derivatives (e.g.,
D3510
ammonia)
E8. Transmission and distribution of electricity D3510
E9. Transmission and distribution of renewable and low-carbon gases D4930
E10. Energy storage D3510
E11. Low-carbon hydrogen production N.A.
E12. Production of heating and cooling using waste heat D3530
E13. District heating and cooling systems D3530
E14. Research and development—professional services N.A.

Sector Energy
Activity E1. Energy from solar photovoltaic and concentrated solar power (including
electricity, heating, cooling)
ISIC/PSIC D3510
Description This class includes generation of bulk electric power, transmission from
generating facilities to distribution centers, and distribution to end users and
power generation as part of cogeneration.
This class includes:
 Operation of generation facilities that produce electricity, including
thermal, nuclear, hydroelectric, gas turbine, diesel, and renewable
 Operation of transmission systems that convey electricity from the
generation facility to the distribution system
 Operation of distribution systems (lines, poles, meters, wiring) that convey
electricity received from the generation facility or the transmission system
to the final consumer
 Sale of electricity to users
 Activities of electric power brokers or agents that arrange the sale of
electricity via power distribution systems operated by others

47
  Operation of electricity and transmission capacity exchanges for electric
power
Objective Climate change mitigation
Methodology Criteria
Green All energy generation and cogeneration activities from solar photovoltaic and
concentrated solar power are directly eligible. Hybrid solar and wind power plants
and floating solar panels are covered under this activity.
Amber N.A.
(transition)
Ineligible Power plants dedicated to supporting fossil fuel infrastructure (e.g., operations of
fossil fuel activities) are ineligible.

DNSH Requirements
Promotion of circular economy
 Verify, through a project management plan or technology datasheets, that photovoltaic
panels and associated components have been designed and manufactured for durability and
ease of disassembly, reconditioning, and recycling.
 Verify that hazardous and non-hazardous waste management plans are in place according to
the scale of the project, including proper management of waste from replacement and
operation of panels (electric and electronic waste), prioritizing recycling of those with potential
for use and proper management of those classified as hazardous waste (in accordance with
waste sector W1. Collection and transport of non-hazardous waste).
 Solar photovoltaic modules must be certified under UL1703/UL61730—Photovoltaic Module
Safety Standards or an equivalent certification.
Sustainable use and protection of water resources
 Have a plan that involves water resource management actions to promote efficient use of
water, especially in the process of cleaning the panels.

Sector Energy
Activity E2. Electricity generation from wind power
ISIC/PSIC D3510
Description This class includes generation of bulk electric power, transmission from
generating facilities to distribution centers, and distribution to end users and
power generation as part of cogeneration.
This class includes:
 Operation of generation facilities that produce electricity, including
thermal, nuclear, hydroelectric, gas turbine, diesel, and renewable
 Operation of transmission systems that convey electricity from the
generation facility to the distribution system
 Operation of distribution systems (lines, poles, meters, wiring) that convey
electricity received from the generation facility or the transmission system
to the final consumer
 Sale of electricity to the user
 Activities of electric power brokers or agents that arrange the sale of
electricity via power distribution systems operated by others

48
  Operation of electricity and transmission capacity exchanges for electric
power
Objective Climate change mitigation
Methodology Criteria
Green All energy generation activities from wind are directly eligible.
Hybrid solar and wind power plants are also covered under this activity.
Amber N.A.
(transition)
Ineligible Power plants dedicated to supporting fossil fuel infrastructure (e.g., operations of
fossil fuel activities) are ineligible.

DNSH Requirements
Promotion of circular economy
 A waste management plan is in place to ensure end-of-life recycling of electrical and
electronic equipment.
 At the end of its useful life, equipment undergoes preparation for reuse, recovery, or recycling
operations or appropriate treatment, including disposal of all fluids and selective treatment of
waste electrical and electronic equipment.

Sector Energy
Activity E3. Electricity generation from hydropower
ISIC/PSIC D3510
Description This class includes generation of bulk electric power, transmission from
generating facilities to distribution centers and distribution to end users and
power generation as part of cogeneration.
This class includes:
 Operation of generation facilities that produce electricity, including
thermal, nuclear, hydroelectric, gas turbine, diesel, and renewable
 Operation of transmission systems that convey electricity from the
generation facility to the distribution system
 Operation of distribution systems (lines, poles, meters, wiring) that convey
electricity received from the generation facility or the transmission system
to the final consumer
 Sale of electricity to the user
 Activities of electric power brokers or agents that arrange the sale of
electricity via power distribution systems operated by others
 Operation of electricity and transmission capacity exchanges for electric
power
Objective Climate change mitigation
Methodology Criteria
Green The activity meets any of the corresponding criteria.
For run-of-the-river systems
 The electricity generation facility is directly eligible if it is a run-of-the-river
facility and does not have an artificial reservoir or reservoir.

49
  Run-of-the-river hydropower facilities must align with the parameters set
by the relevant environmental authorities to be eligible.
For reservoir systems
 If the power density of the electricity generation facility is greater than 5
W/m2, the project is exempt from conducting the product carbon footprint
lifecycle assessment or GHG protocol and they are directly eligible.
Hydropower facilities with a power density of less than 5 W/m2 must
demonstrate, using ISO 14067, an environmental impact assessment
hydro-framework or a GHG protocol product such as the product carbon
footprint, that they operate with lifecycle emissions of less than 100
gCO2e/kWh. The electricity generation facility of the run-of-river plant is
eligible if it does not have an artificial reservoir.
 Pumped storage facilities are eligible if they meet the above
requirements. It is important to ensure that the installations will be
charged with energy sources that has emissions of less than 100
gCO2/kWh.
Amber N.A.
(transition)
Ineligible Power plants dedicated to supporting fossil fuel infrastructure (e.g., operations of
fossil fuel activities) are ineligible.

DNSH Requirements
Protection of healthy ecosystems and biodiversity
 Verify that the project is not located in a protected area.
 Before building a reservoir, perform an impact assessment of the project to determine all
possible impacts on the state of the water bodies within the river basin and on the protected
habitats and species that depend directly on the water resource, considering migration
corridors, free-flowing rivers, and ecosystems close to undisturbed areas in particular.
 Establish a river basin management plan.
 Avoid potential harm to biodiversity associated with ecosystem fragmentation and habitat
changes, hydrological and hydrogeological regimes, water characteristics, and interference
with species migration pathways as a result of the establishment of the installation and
operation of hydroelectric plants.
 Ensure downstream and upstream fish migration (e.g., fish-friendly turbines, fish guidance
structures, fully functional fish passages, measures to stop or minimize operation and
discharges during migration or spawning).
 Ensure that project uses a strategic environmental assessment for river basin planning and
hydropower policy development.
Pollution prevention and control
 Avoid dumping of waste into bodies of water and generation of waste during the construction
phase.

Sector Energy
Activity E4. Geothermal energy generation (including electricity, heating, cooling)
ISIC/PSIC D3510
Description Same as above

50
Objective Climate change mitigation
Methodology Criteria
Green Emission intensity measured during the lifecycle of the power plant is less than
100 gCO2e/kWh.
Amber N.A.
(transition)
Ineligible Power plants dedicated to supporting fossil fuel infrastructure (e.g., operations of
fossil fuel activities) are ineligible.

DNSH Requirements
Pollution prevention and control
 Verify control and prevention of emissions of non-condensable geothermal gases with
specific environmental threats, such as hydrogen sulfide, CO2, and methane, which are
released from flash steam and dry steam power plants.
 Ensure that binary plants have closed systems and do not emit steam.
 Prevent thermal anomalies associated with waste heat discharge, which should not exceed
3°K for groundwater environments or 1.5°K for surface water environments.
 Emissions to the atmosphere: Operations of high-enthalpy geothermal energy systems must
ensure that adequate abatement systems are in place to meet international standards and
guidelines. (e.g., IFC Environmental, Health, and Safety Guidelines for Geothermal Power
Generation).

Sector Energy
Activity E5. Bioenergy power generation (including electricity, heating, cooling)
ISIC/PSIC D3510
Description Same as above
Objective Climate change mitigation
Methodology Criteria
Green The project must meet the following criteria.
 All installations must demonstrate that they operate with lifecycle
emissions below the current threshold (100 gCO2e/kWh).
 Production of raw materials should not compete with food production,
contribute to deforestation, or harm ecosystems. For this type of project, it
is important to ensure the sustainable origin of the raw material (biomass)
used for energy production, which can be verified using one of the
following options.
o If the biomass consists of waste (e.g., agricultural, food industry,
or municipal waste), the bioenergy produced is directly eligible.
o If the biomass does not correspond to the first option, it must be
verified that the feedstock used for bioenergy production meets
the criteria of the corresponding activities in the agricultural sector
of the taxonomy.
o If the first two options are not applicable, the sustainable origin of
the feedstock used for bioenergy production can be verified using

51
 one of the following sustainability certifications that are recognized
in the market.
 Forest Stewardship Council
 Voluntary biomass biofuel scheme
 Bonsucro—International Sustainability and Carbon
Certification
 Roundtable on Sustainable Biomaterials
 Rainforest Alliance
These certifications ensure the sustainable origin of the raw material used for
energy production.
Amber N.A.
(transition)
Ineligible Power plants dedicated to supporting fossil fuel infrastructure (e.g., operations of
fossil fuel activities) are ineligible.

DNSH Requirements
Promotion of circular economy
If the raw material is industrial biowaste (including food industry biowaste) or municipal biowaste:
 Solid biowaste used in the manufacturing process must originate from source-separated
waste streams and be collected separately (non-hazardous)
 Biowaste must comply with the waste regulatory framework and national, regional, and local
waste management plans.
 When municipal biowaste is used as feedstock, the project is complementary and does not
compete with the existing municipal biowaste management infrastructure.
 If the feedstock is biogas, it must meet the substantial contribution criteria and compliance
requirements set out in the sectoral whitepaper for the waste and emissions capture sector.
Protection of healthy ecosystems and biodiversity
 The installation does not replace forest areas or displace housing.

Sector Energy
Activity E6. Electricity generation from ocean energy
ISIC/PSIC D3510
Description Same as above
Objective Climate change mitigation
Methodology Criteria
Green All electricity generation activities from ocean energy are directly eligible.
Amber N.A.
(transition)
Ineligible Power plants dedicated to supporting fossil fuel infrastructure (e.g., operations of
fossil fuel activities) are ineligible

DNSH Requirements
Protection of healthy ecosystems and biodiversity

52
  Avoid potential harm to marine ecosystems and biodiversity.
 Show that the project or activity will not harm the ecosystem or landscape where it will be
developed by establishing the appropriate preventive measures and paying attention to the
risks derived from it.
 Verify that the project is not located in a protected area.

Sector Energy
Activity E7. Electricity generation from hydrogen or its derivatives (e.g., ammonia)
ISIC/PSIC D3510
Description Same as above
Objective Climate change mitigation
Methodology Criteria
Green The activity complies with the following criteria.
 Emission intensity measured during the lifecycle of the power plant is less
than 100 gCO2e/kWh
 Generation of electricity prioritizes use of renewable energy sources such
as solar photovoltaic and wind, with hydrogen used only if those are
unviable. (This is because generation of electricity from hydrogen is
inefficient because it uses renewable energy to produce hydrogen, which
is reconverted to electricity. The reconversion process could be avoided
by using the renewable energy directly.)
Amber Eligible capital expenditure measures that can meet any of these criteria.
(transition)
 Retrofit of existing power generation facilities (e.g., combined cycle gas
turbine, fuel cells) to that allow hydrogen or its derivatives to meet the
combined cycle gas turbine technological readiness thresholds
 New power plants (e.g., combined cycle gas turbine, fuel cells) that can
allow 50 vol% hydrogen or more
 Other capital expenditure investments directly supporting or facilitating
hydrogen uptake are eligible if the measures enable hydrogen or its
derivatives that meet the combined cycle gas turbine technological
readiness thresholds.
Ineligible Power plants ? fossil fuel infrastructure (e.g., operations of fossil fuel activities)
are ineligible

DNSH Requirements
Pollution prevention and control
 Ensure that emissions to air, water, and soil are prevented or minimized per international
standards and guidelines (e.g., IFC environmental, health, and safety guidelines: Air
Emissions and Ambient Air Quality; ISO 14001:2015 Environmental Management Systems—
Requirements with Guidance for Use; Strategic Approach to International Chemicals
Management; ISO 11014:2009(en) Safety Data Sheet for Chemical Products).

Sector Energy
Activity E8. Transmission and distribution of electricity

53
ISIC/PSIC D3510
Description Same as above
Objective Climate change mitigation
Methodology Criteria
Green The activity is eligible if it meets one of the following criteria:
1) Transmission and distribution infrastructure or equipment that is in an
electrical system that meets at least one of the following criteria.
Option 1: All electricity transmission and distribution infrastructure and
equipment in systems that are on a full decarbonization trajectory are
eligible except for infrastructure that is dedicated to creating a direct
connection or expanding an existing direct connection between an energy
generation plant whose emissions exceed 100 gCO2e/kWh, measured to
a substation or grid.
A system is considered to be on a full decarbonization path if any of the
following conditions are met.
 More than 67 percent of the connected generation capacity (new
systems) from 2021, injecting energy to the grid, is below the
generation threshold value of 100 gCO2e/kWh (renewable energy),
according to the product carbon footprint, over a 5-year average
period.
 The average emissions factor of the system grid is below the
threshold value for the average last 5 years.
Option 2: Transmission and distribution infrastructure that supports
expansion and consolidation of microgrids in non-interconnected areas is
eligible. (Micro and mini grids are part of the scope.)
In addition, the following activities related to transmission and distribution
network are directly eligible, regardless of whether the system is on a path
to full decarbonization (exhaustive list of potential eligible investments).
 Projects associated with measures to strengthen the electricity grid
and improve the quality by reducing losses
 Construction and operation of the direct connection, or expansion of
the existing direct connection, of low-carbon electricity generation
below the 100 gCO2e/kWh threshold measured on a life cycle basis
to a substation or grid
 Construction and operation of electric vehicle charging stations and
support of electrical infrastructure for electrification of transport
(subject to taxonomy eligibility in the transportation sector)
 Construction, installation, and operation of equipment and
infrastructure where the primary objective is an increase in
generation or use of renewable electricity
 Installation of equipment to increase control and monitoring of the
electrical system and enable development and integration of
renewable energy sources, including:
o Sensors and measurement tools (including weather sensors to
forecast renewable production)
o Communication and control (including advanced software and
control rooms, substation or feeder automation, and voltage
control capabilities to accommodate more decentralized

54
 renewable feeds)

2) Installation of equipment such as devices and smart metering systems that

allow information to be brought to users so that they can act remotely on
consumption, including customer data centers.
Construction and installation of equipment that allows exchange of electricity,
specifically renewable, between users. Interconnects between transmission
systems are eligible, as long as one of the systems is eligible.
Amber  Projects that support the draft Indicative Generation Capacity Expansion Plan
(transition) 2024-2034 to reduce carbon emissions from power generation to 209 g-
CO2/kWh by fiscal 2034
 Projects aligned with the National Electricity Policy and National Electricity
Plan has set a target of 60 percent of renewable energy by 2030
Ineligible Transmission and distribution infrastructure dedicated to connecting fossil fuel
plants to the grid is ineligible.
Infrastructure dedicated to creating a direct connection or expanding an existing
direct connection between a substation or grid and an energy production plant
that in its life cycle generates GHG of more than 100 gCO2e/kWh is ineligible.

DNSH Requirements
Protection of healthy ecosystems and biodiversity
 Avoid potential harms of underground power lines on marine and terrestrial ecosystems
(proven by an environmental impact study). Avoid routes with strong associated
environmental harms.
 Conduct field trips in the project area where data are collected to detail aspects concerning
flora, fauna, and fragile ecosystems of the site.
Pollution prevention and control
 Respect applicable rules and regulations to limit the impact of electromagnetic radiation on
human health, particularly those established by the International Commission on Non-
Ionizing Radiation Protection, in the case of high-voltage overhead lines.
 Do not use equipment, such as transformers or generators, that contains electrical fluid
based on polychlorinated biphenyls.

Sector Energy
Activity E9. Transmission and distribution of renewable and low-carbon gases
ISIC/PSIC D3520
Description Conversion, reuse, or repurposing of existing gas networks for use in transport
and distribution of renewable and low-carbon gases (e.g., low-carbon hydrogen)
Objective Climate change mitigation
Methodology Criteria
Green The activity is eligible if it meets one of the following criteria.
 Construction or operation of new transmission and distribution networks
dedicated to hydrogen or other low-carbon gases that have lifecycle
emissions of less than 100 gCO2e/kWh

55
  Conversion or reuse of existing natural gas networks to 100 percent low-
carbon hydrogen
 Conditioning of gas transmission and distribution networks that allow
hydrogen and other low-carbon gases to be integrated into the network,
including any gas transmission or distribution network activity that allows
the mixture of hydrogen or other low-carbon gases (e.g., biomethane) to
be increased in the gas system
Amber The activity complies with one of the following criteria.
(transition)
 Transmission and distribution networks transporting at least 50 vol% of
low-carbon gases
 Retrofit of natural gas distribution lines to allow at least 50 vol% of low-
carbon gases
Ineligible Transmission and distribution of fossil fuels, including natural gas is excluded.

DNSH Requirements
Pollution prevention and control
 Fans, compressors, pumps, and other equipment used comply with applicable regulations
and represent the best available technology to minimize risk of contamination by leaks.

Sector Energy
Activity E10. Energy storage
ISIC/PSIC N.A.
Description Construction and operation of facilities that store energy from taxonomy-aligned
activities and return it in the form of electricity, heat, cooling, or steam. The
activity includes pumped hydro storage, thermal energy storage (fluids, aquifer
thermal energy storage, underground thermal energy storage), and compressed
air storage, all of which are suitable for large-scale energy storage. This activity
can support integration of renewable energy systems into electricity transmission
and distribution.
Objective Climate change mitigation
Methodology Criteria
Green All energy storage activities from taxonomy-eligible activities are directly eligible.
Amber N.A.
(transition)
Ineligible N.A.

DNSH Requirements
Promotion of circular economy
 Waste electrical and electronic equipment, including batteries, must be disposed of for
recycling with certified or authorized organizations.

56
Sector Energy
Activity E11. Low-carbon hydrogen production
ISIC/PSIC Not listed
Description Hydrogen production can contribute to the climate mitigation goal. The thresholds
reflect the performance of electrolysis with low-carbon energy, as defined in
electricity generation activities. The proposed thresholds are also in line with
current market best practices for certifying low-carbon hydrogen. Low-carbon
hydrogen can decarbonize activities, reducing emissions in various sectors such
as energy, transportation, and industry.
Objective Climate change mitigation
Methodology Criteria
Green Hydrogen production must have lifecycle GHG emissions of 3 tCO2e/t of hydrogen
or less.
Amber N.A.
(transition)
Ineligible Hydrogen produced from fossil fuels including natural gas is not eligible.

DNSH Requirements
Promotion of circular economy
 Waste and sub-products from the manufacturing process should be treated according to the
waste hierarchy and ideally recycled in the same process.

Sector Energy
Activity E12. Production of heating and cooling using waste heat
ISIC/PSIC D3530
Description Waste heat contained in the products and by-products of a process, which raises
their temperature to levels higher than those suitable for emission or storage.
Energy-intensive industries consume significant volumes of energy for their
mechanical, physical, and chemical processes. A large amount of this energy
consumed (20–50 percent) is not used and is emitted into the environment in the
form of waste heat. The waste heat contained in the products and by-products of
a process can be used to increase efficiency and thus help reduce the carbon
footprint of other activities.
Objective Climate change mitigation
Methodology Criteria
Green All activities related to the production of heat or cool from waste heat are eligible.
Amber N.A.
(transition)
Ineligible N.A.

DNSH Requirements
Promotion of circular economy

57
  Evaluate availability of highly durable and recyclable equipment and components that are
easy to disassemble and refurbish.

Sector Energy
Activity E13. District heating and cooling systems
ISIC/PSIC D3530
Description Construction, refurbishment, and operation of pipelines and associated
infrastructure for distribution of heating and cooling, ending at the sub-station or
heat exchanger
Objective Climate change mitigation
Methodology Criteria
Green The activity must meet the following criteria.
 Construction and operation of pipelines and infrastructure associated with
heat and cold distribution are eligible. The activities must comply with
current regulations regarding energy efficiency.
 All energy sources for heating and cooling must come from taxonomy-
eligible activities.
Amber N.A.
(transition)
Ineligible N.A.

DNSH Requirements
N.A.

Sector Energy
Activity E14. Research and development—professional services
ISIC/PSIC N.A.
Description This category includes research; development; and implementation of innovative
solutions, processes, technologies, technical advice, and business models
designed to reduce, eliminate, or prevent GHG emissions. These solutions must
demonstrate the ability to contribute substantially to the mitigation objective of the
activities of the energy sector.
Objective Climate change mitigation
Methodology Criteria
Green Creation of intangible assets and research, development, and innovation
activities that have the objective of promoting compliance with the substantial
contribution criteria of the taxonomy in the energy sector, including energy
services companies, that comply with the thresholds of the taxonomy are
considered directly eligible.

58
Construction
Globally, buildings and the construction sector were responsible for nearly 40 percent of total GHG
emissions, including embodied emissions from new construction, in 2022 [52]. To increase energy
efficiency in buildings, Pakistan enacted the Green Building Code, which sets minimum standards
regarding energy efficiency during building operation (energy consumption for, e.g., heating,
cooling, lighting, water heating). The construction sector also has an indirect impact on GHG
emissions associated with use of construction materials and construction techniques.
The energy subsector within the manufacturing and construction industries affects GHG emissions
derived from the combustion of fossil fuels, specifically in cement, iron, steel, chemicals, brick kilns,
and other construction-specific industries. Its contribution to total national emissions is 13.5 percent,
making it the third-most-significant subsector [39]
Emissions from the construction industry are predominantly linked to the use of coal in brick kilns
and the cement industry. In 2018, production of 82.5 billion fired bricks, fueled by sources such as
lignite, rice husks, rubber tires, plastics, and other agricultural residues, resulted in significant
emissions. An estimated 13 million tonnes of coal was consumed for this purpose, with 70 percent
of the energy needs met by coal and 30 percent by biomass.

Activities in the construction sector considered in the taxonomy are shown below.
Activity ISIC/PSIC Code
B1. Construction of new buildings F4100
B2. Renovation of existing buildings F4100, F4330
B3. Individual measures and professional services F4321, F4322, F4329
B4. Acquisition or ownership of buildings L6810

A market baseline for energy consumption in Pakistan's buildings is provided in Annex 2.

The technical information fact sheets for the selected activities are described below.
Sector Construction
Activity B1. Construction of new buildings
ISIC/ISIC F4100
Description Design and construction of new buildings presents an opportunity to increase
energy savings and, in turn, mitigate GHG emissions during operation. This
activity can contribute substantially more to climate change mitigation than
conventionally designed buildings.
The substantial contribution criteria of the activity seek to guarantee better
performance than under National Sustainable Construction Standards: Energy
Conservation Building Code—2023.
Objective Climate change mitigation
Methodology Criteria
Green Option 1: Residential construction:
For Private homes, multi-family residential buildings, and social housing
are included in this category. These buildings must meet any of the following
criteria:

59
  Energy demand (kWh/m2 year) must achieve 20 percent savings over the
current American National Standards Institute (ANSI)/American Society of
Heating, Refrigerating, and Air-Conditioning Engineers
(ASHRAE)/Illuminating Engineering Society of North America (IESNA)
90.1 standard or Energy Conservation Building Code of Pakistan, 2023.
 In social housing, the energy demand (kWh/m2 year) must achieves a
minimum of 20 percent savings over the current ANSI/ASHRAE/IESNA
90.1 standard or Energy Conservation Building Code of Pakistan, 2023.
For single-family dwellings (low-rise residential buildings), minimum energy
efficiency requirements should be compared with the current version of
ANSI/ASHRAE/IESNA 90.2.
Housing developments under the Prime Minister Five Million Naya Pakistan
Housing Programme must comply with green building guidelines defined by the
Ministry of Climate Change for this program.
For Commercial, hotel, educational, hospital, and office construction
Energy savings must be at least 20 percent over the current
ANSI/ASHRAE/IESNA 90.1 standard or the Energy Conservation Building Code
of Pakistan, 2023. For each type of building that falls into this category. These
criteria are applicable for the following building uses.
 Offices of any size
 Hotels with a minimum of 50 rooms
 Shopping centers larger than 50,000 m2 in area
 Hospitals and health care centers larger than 1,500 m2 in area
 Schools and educational centers larger than 8,200 m2 in area
 Public buildings of any size
 Restaurants in shopping centers
Option 2:
Operational emissions from buildings must be less than 23 kg of CO2e/m2 per
year until December 31, 2030. This threshold must be reviewed periodically to
ensure that it complies with decarbonization trajectories for the construction
sector (e.g., Carbon Risk Real Estate Monitor model) and in accordance with the
objectives established by Pakistani regulations.
Option 3:
Equivalency with green building certification systems: The project, whether
residential or commercial, is eligible if the design and construction have a green
building certification that enables energy savings of at least 20 percent over the
current baseline of ANSI/ASHRAE/IESNA 90.1 standard or the Energy
Conservation Building Code of Pakistan, 20239
Applicable certifications
 Leadership in Energy and Environmental Design
 Excellence in Design for Greater Efficiencies
 HQE International
Other certifications will be considered for future updates of this taxonomy
provided that the percentage of savings in energy consumption or GHG
emissions in relation to the thresholds of the taxonomy can be verified and that

9
The National Energy Efficiency and Conservation Authority is collaborating with IFC and the World Bank on launching a local certification
and rating system for a customized building rating system in Pakistan.

60
 they have independent third-party verification (outside the project) with national
or international recognition.
Amber N.A. (New buildings must meet Green criteria.)
(transition)
Ineligible  Buildings must not be used for extraction, storage, transportation, or
manufacturing of fossil fuels.
 Energy for operation of the building must not come directly from fossil
fuels (e.g., power generation plants).
Power generation plants as backup sources in case of power grid failure and
micro-generation systems that allow the use of solid waste can be part of building
services.

DNSH Requirements
Climate change adaptation and resilience
 New buildings must incorporate strategies to enhance resilience against extreme weather
events (e.g., floods, fires, earthquakes, hurricanes) and adapt to rising temperatures for
internal comfort, following Pakistan's regulations and approved construction codes.
 A climate and non-climate risk assessment scheme for the adaptation and resilience potential
of the new building must be applied. These tools include:
- Building Resilience Index (IFC-World Bank), used to assess the resilience of buildings
to risk of damage from climatic events
- Public Infrastructure Engineering Vulnerability Committee, developed by the Climate
Risk Institute
- Envision, developed by the Institute for Sustainable Infrastructure
- Fast Infra Label, produced by Fast Infra Group
- Other evaluation programs or tools that enable the level of risk of damage from climatic
and non-climatic events to be determined
Sustainable use and protection of water resources
 All relevant water appliances (e.g., showers, faucets, toilets, urinals) must achieve at least 20
percent water savings. If not, the building must adopt alternative water-saving measures
(e.g., rainwater use, gray or black water reuse) to meet national standards.
Promotion of circular economy
 Demonstrate reuse and recycling of at least 20 percent of waste generated on site through a
circularity plan (rising to 50 percent by 2028).
 Demonstrate that the purchase of recycled materials for construction was prioritized with a
sustainable purchasing plan (purchase takes into account sustainability KPIS). In 2026, the
goal of recycled or sustainable materials (that meet the criteria defined in the manufacturing
sector) used in construction must reach at least 20 percent of total building materials.
Pollution prevention and control
 Guarantee that components and construction materials used do not contain asbestos or
contaminating substances identified in the Registration, Evaluation, Authorization and
Restriction of Chemicals regulation or its equivalent in national technical standards.
 If new construction is located on a potentially contaminated site, the site must be examined
for potential contaminants.

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  For noise pollution, applicable standards must be met for eight-hour workdays and with a
permissible exposure level of 85 dB(A) for eight hours, 100 dB(A) for four hours, 102 dB(A)
for 45 minutes, and 115 dB(A) for seven minutes.
Protection of healthy ecosystems and biodiversity
 At least 15 percent of all wood products used in new construction for framing, cladding, and
finishes must have been recycled, reused, or sourced from sustainably managed forests as
certified by an accredited third-party certification body (e.g., Forest Stewardship Council,
Programme for the Endorsement of Forest Certification).

Sector Construction
Activity B2. Renovation of existing buildings
ISIC/PSIC F4100, F4330
Description Renovation of buildings is part of the sustainable solutions within the construction
sector because, by its very nature, an existing building is reused, which will have
a lower environmental impact than demolition. In addition to increasing efficiency,
a renovation can include energy generation systems (solar systems or similar),
installation of charging points for electric vehicles, and integration of energy
storage systems. Existing buildings must be adapted to adhere to new
regulations and thus align with the country's commitments and goals to address
climate change.
Objective Climate change mitigation
Methodology Criteria
Green Renovation of residential buildings
Private homes, multi-family residential buildings, and social housing are included
in this category. These buildings must meet one of the following criteria.
 Once the renovation has been completed, the percentage of energy
savings must meet the criteria established for activity B1.
 As an additional compliance alternative, it will be possible to verify that
the installation of renewable energy generation systems allows a
percentage of savings in final energy demand equivalent to 10 percent in
addition to savings over the current baseline of ANSI/ASHRAE/IESNA
90.1 standard or the Energy Conservation Building Code of Pakistan,
2023.
Renovation of commercial buildings
These buildings must meet one of the following criteria.
 Percentage of energy savings must meet the criteria established for
activity B1.
 As an additional compliance alternative, it will be possible to verify that
installation of renewable energy generation systems (non-conventional
sources) allows a percentage of savings in equivalent final energy
demand, in kWh/m2 year, of at least 10 percent in addition to the savings

62
 over the current baseline of ANSI/ASHRAE/IESNA 90.1 standard or the
Energy Conservation Building Code of Pakistan, 2023.
Equivalency with green building certification systems
Renovation of a residential or commercial building is eligible if the design and
construction have a green building certification that enables verification of energy
savings of at least 20 percent over the current baseline of ANSI/ASHRAE/IESNA
90.1 standard or the Energy Conservation Building Code of Pakistan, 2023.
Applicable certifications
 Leadership in Energy and Environmental Design
 Excellence in Design for Greater Efficiencies
 HQE International
 Living Building Challenge
Other certifications will be considered for future updates of this taxonomy
provided that the percentage of savings in energy consumption or GHG
emissions in relation to the thresholds of the taxonomy can be verified and that
they have independent third-party verification (outside the project) with national
or international recognition.
For single-family dwellings (low-rise residential buildings), minimum energy
efficiency requirements should be compared with the current version of
ANSI/ASHRAE/IESNA 90.2.
Amber N.A.
(transition)
Ineligible  Buildings must not be used for extraction, storage, transportation, or
manufacturing of fossil fuels.
 Energy for operation of the building must not come directly from fossil
fuels (e.g., power generation plants).
Power generation plants as backup sources in case of power grid failure and
micro-generation systems that allow the use of solid waste can be part of the
building services.

DNSH Requirements
Sustainable use and protection of water resources
 All relevant water appliances (e.g., showers, faucets, toilets, urinals) must achieve at least 20
percent water savings. If not, the building must adopt alternative water-saving measures
(e.g., rainwater use, gray or black water reuse) to meet national standards.
Promotion of circular economy
 Demonstrate reuse and recycling of at least 20 percent of waste generated during
construction through a waste management plan.
 Demonstrate use of recycled materials or use of recycled raw materials for 20 percent of total
project materials.
Pollution prevention and control
 Before renovation is begun, a specialist trained in asbestos removal and identification of
other materials containing substances of concern must inspect the building in accordance
with national legislation.
 Trained personnel must remove any coating that contains or may contain asbestos (e.g.,
removal or modification of insulation panels, tiles, or other materials containing asbestos),

63
 with health surveillance before, during, and after the work and in accordance with applicable
regulations.

Sector Construction
Activity B3. Individual measures and professional services
ISIC/PSIC F4321, F4322, F4329
Description Inclusion of individual measures and professional services is a fundamental,
cross-sector activity in the construction and renovation of buildings by allowing
the minimum percentages of energy savings indicated in this taxonomy to be
achieved. The proposed measures are designed to take advantage of
environmental conditions, maximizing sources of thermal control (control of
temperature), natural ventilation, and energy reduction and promoting use of
mechanical and electrical systems such as boilers, air conditioning, mechanical
ventilation, and electric lighting to create comfortable conditions for occupants.
These measures can be implemented at the building level and at the municipal
level so that their transversality facilitates their adoption. These are related to the
following activities.
B1. Construction of new buildings
B2. Renovation of existing buildings
Objective Climate change mitigation
Methodology Criteria
Green Building level
Individual measures and professional services are important, especially for
building renovation, and help reduce energy use and emissions during the
operational phase of a building.
Individual measures can be classified into two categories.
 Efficiency (improvements in, e.g., lighting, air conditioning and pumping
systems, thermal insulation, hydraulic devices, elevators, home
automation)
 On-site energy generation and storage and charging points for electric
vehicles
Individual measures and professional services have been included as enabling
activities that help improve energy performance and increase decarbonization of
buildings. The list must be updated periodically. Some individual measures are
listed as always eligible; that is, there are no technical requirements to meet,
because these technologies are dedicated to facilitating energy savings and
efficient use of electricity. Professional services are necessary for proper
evaluation of construction conditions and the potential for energy efficiency.
Eligible individual measures, conditioned to providing technical support
 Adding insulation to existing envelope components such as external
walls, roofs (including green roofs), lofts, basements, and ground floors
(including measures to ensure watertightness and to reduce the effects of
thermal bridges and scaffolding) and products for applying insulation to
the building envelope (e.g., mechanical fixings, adhesives). It must be

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 demonstrated how and how much these strategies reduce energy
consumption of the building.
 Replacing existing windows with new energy-efficient windows. It is
necessary to demonstrate how and how much the building's energy
consumption decreases.
 Replacing external doors with new energy-efficient ones. How this change
reduces the energy consumption of the building must be verified.
 Applying reflective paint on roofs to reduce thermal loads, thereby
reducing the energy consumption of the building and increasing the
thermal comfort of the space
 Replacing water heating systems with highly efficient systems or solar
water heating systems
 Replacing existing pumps with energy-efficient pumps
 Installing efficient LED lighting and lighting control systems
 Installing low-flow kitchen faucets and sanitary taps that allow water
saving parameters to be equaled or exceeded
 Assembling and operating electric heat pumps that use refrigerants with a
global warming potential of 675 or less and meet energy-efficiency
requirements stipulated in relevant regulations
 Installing green roofs and walls that provide substantial thermal insulation
in buildings
Individual measures that are always eligible
 Zone thermostats, smart thermostat systems, and sensor equipment
(e.g., motion and daylight control systems) (see ICT sector)
 Building management systems (see ICT sector)
 Electric vehicle charging points
 Smart energy and gas meters
 Facade and roof elements with solar protection or control functions,
including those that support growth of vegetation
 Infrastructure for separation of waste at the source in line with current
regulations
Other individual measures that are always eligible when implemented as part of
building services
 Solar photovoltaic systems (and auxiliary technical equipment) for self-
consumption and grid tied
 Solar collectors for heating water (and auxiliary technical equipment)
 Other energy generation systems from renewable sources (e.g., wind
energy, waste).
 Installation of new heat pumps that contribute to renewable energy goals
in heating and cooling (and the necessary auxiliary technical equipment)
or replacement of existing ones
 Wind turbines (and auxiliary technical equipment)
 Thermal or electrical energy storage units (and auxiliary technical
equipment)
 High-efficiency micro–combined heat and power plant
 Heat exchangers and recovery systems
The following professional services are always eligible.
 Technical consultancies (e.g., energy simulation, project management,
issuance of energy performance certificates, energy consultants,
specialized training) linked to the individual measures mentioned above

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  Accredited energy audits and building performance evaluations
 Energy management services and contracts, including services that
energy services companies provide
 Sustainable building designers and accredited professionals in
certification systems
Municipal level
Initiatives and projects at the municipal or district level substantially mitigate GHG
emissions. Implementation of clean (low carbon) technologies or urban
development strategies makes city management more efficient. Low-carbon
urban growth helps increase density in cities with a lower environmental impact
and reduce the use of natural resources required to obtain the services offered
by these natural areas.
Energy
 Self-sufficient public lighting systems that avoid construction of energy
transmission networks
 Public lighting management systems based on the presence of people
and predetermined schedules in such a way that energy is not used when
lighting in the sector is not required
 On-site energy generation systems (distributed energy resources)
 Electric vehicle charging points in urban areas
Mobility
 Interventions at the municipal level that favor reduction of emissions due
to mobility (e.g., route adjustment, modal changes)
Waste
 Waste to energy projects on the scale of a neighborhood or building
 Waste transfer centers that promote recycling and reuse, avoiding
transportation and disposal of waste to landfills or final waste disposal
centers
Water
 Sustainable urban drainage systems that demonstrate retention of runoff
water in cities
 Wastewater treatment plants (gray and black) to avoid disposal of
wastewater into municipal treatment systems
 Commercial and residential micro-generation systems from wastewater or
waste treatment
ICT
 Sensor networks and integrated systems to increase the efficiency of
urban development , optimize the functioning of infrastructure, integrate
different services (e.g., smart city context: energy + mobility +
construction), and facilitate creation of intelligent advanced measurement
systems
Landscape
 Trees in road easements that provide shade and are easy to maintain
 Recovery of public spaces from urban rivers (post-sanitation), meaning
recover areas after the rivers have been cleaned.

66
Amber N.A.
(transition)
Ineligible N.A.

DNSH Requirements
N.A.
Sector Construction
Activity B4. Acquisition or ownership of buildings
ISIC/PSIC L6810
Description Promoting energy efficiency and reducing GHG emissions in existing buildings
through acquisition and ownership helps avoid the impacts of building new
buildings, increasing demand of green buoldings and generating incentives for
owners to renovate buildings with energy efficiency standards and positioning
acquisition of buildings as an emerging value market.
Objective Climate change mitigation
Methodology Criteria
Green Acquisition or ownership of buildings may be eligible in these cases.
 Buildings built after December 31, 2020, must meet the criteria specified
in the new building construction activity (B1).
 Buildings built between December 31, 2015, and December 31, 2020,
must have a percentage of savings in energy demand that is at least 15
percent greater than the current baseline of ANSI/ASHRAE/IESNA 90.1
standard.
 Buildings built before December 31, 2015, must demonstrate savings in
energy demand of at least 10 percent greater than the current baseline of
ANSI/ASHRAE/IESNA 90.1 standard.
Amber N.A.
(transition)
Ineligible  Buildings must not be used for extraction, storage, transportation, or
manufacturing of fossil fuels.
 Energy for operation of the building must not come directly from fossil
fuels (e.g., power generation plants).
Power generation plants as backup sources in case of power grid failure and
micro-generation systems that allow the use of solid waste can be part of the
building services.

DNSH Requirements
Transition to a circular economy

 Do not mix waste collected separately in storage and transfer facilities with other waste or
materials with different properties.
 Use efficient technology designs for use of solid waste so that it does not reach the final
disposal site without treatment.
 Comply with requirements for activities related to comprehensive management of non-
hazardous waste.
 Use preventive and control measures for waste segregation at the source.

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 Pollution prevention and control
 Comply with regulations related to proper management of leachates during separate
transportation of waste.

Water and Waste

Waste
The waste sector and waste management have a large environmental impact because of emissions
from landfills and waste incineration and has a direct impact on soil and water pollution, but waste
management has the potential to support other sectors in reducing GHG emissions through waste
prevention, separate hazardous waste collection, and waste reuse and recycling. Waste-to-energy
technologies offer the possibility of generating electricity and fuels that can replace fossil fuels in
public transportation. In Pakistan, the waste sector emitted 21.72 tCO2e, accounting for
approximately 5 percent of total emissions, of which approximately 80 percent was methane, 11
percent nitrous oxide, and 0.3 percent CO2. Wastewater treatment and discharge is the dominant
source of emissions, followed by solid waste disposal (UNFCCC 2020; 2022).

The following activities are considered under the taxonomy.

ISIC/PSIC
Activity
Code
W1. Collection and transportation of non-hazardous waste E3811
W2. Biowaste treatment: composting of biowaste E3821
W3. Biowaste treatment: anaerobic digestion E3821
W4. Landfill gas capture and use E3821, E3822
W5. Material recovery facilities E3830
W6. Research and development—professional services N.A.

The technical information fact sheets for the selected activities are provided below.
Sector Waste
Activity W1. Collection and transportation of non-hazardous waste
ISIC/PSIC E3811
Description Selective collection and transportation of non-hazardous waste precedes reuse
and recycling of this waste. The activity includes segregation of waste at the
source, in households and businesses, and its transportation to recover reusable
materials and perform the corresponding treatment. This can include use of
containers, collection and transportation vehicles, auxiliary technological
equipment, and information technology systems, among other useful services for
separating waste collection (e.g., informational material, campaigns, activities
with waste advisors), and related infrastructure (e.g., civic service centers,
temporary storage, transfer facilities).
Objectives Climate change mitigation
Methodology Criteria

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Green All projects related to collection and transportation of non-hazardous waste that is
segregated at the source or at an intermediate sorting facility that is intended for
preparation for reuse, recycling, or recovery operations are directly eligible.
Facilities that optimize transportation (e.g., transfer stations) and investments in
compacting, shredding, and other activities that increase logistical capacity to
collect, store, and unload waste are included, in compliance with guidelines that
include an operation permit issued by the ruling body.
This activity applies to non-hazardous waste generated in the country, because
the main objective is to reduce GHG emissions associated with final disposal of
waste (climate change mitigation). Treatment of imported non-hazardous waste
can increase the scope 3 footprint, but this activity can be evaluated under the
circular economy objective in future phases of the taxonomy.
Amber Direct collection and transportation of non-hazardous waste for energy recovery
(transition) without material recovery for recycling
Ineligible Direct collection and transportation of non-hazardous waste for disposal to
landfills that does not include adequate equipment for collection and
transportation

DNSH Requirements
Promotion of circular economy
 Waste collected separately must not be mixed in storage and transfer facilities with other
waste or materials with different properties.
 Technology that allows for optimal use of solid waste so that it does not reach the final
disposal site without treatment must be used.
 Operators must have licenses issued by the appropriate authority to ensure that collection
and transport operations of non-hazardous waste are in line with regulations.
Pollution prevention and control
 Leachates must be properly managed during separate transportation of waste.

Sector Waste
Activity W2. Biowaste treatment: composting of biowaste
ISIC/PSIC E3821
Description Composting is the process by which microorganisms decompose biodegradable
waste in the presence of oxygen, which is why it is sometimes also referred to as
aerobic digestion. The aerobic digestion of domestic organic waste includes
domestic waste generated in households. This definition helps identify which
waste can be considered for this initiative.
Among the benefits of this activity are:
 Stabilization of organic matter and reduction of bad odors
 Reduction of organic load
 Minimization of GHG emissions
 Generation of products for different activities
As part of an integrated waste management system, composting diverts
biodegradable waste from landfills and thus reduces GHG emissions, especially
methane, in the biological decomposition process.
Objectives Climate change mitigation

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Methodology Criteria
Green Composting of organic waste is eligible if it meets all the following criteria.
 The system is sustainable, with organic waste segregated before being
placed in the system.
 The system is well aerated to avoid development of anaerobic zones in
the compost piles that can generate methane.
 A monitoring and contingency plan is in place to minimize methane
leakage at the facility.
 The compost produced is used as fertilizer or for soil improvement.
Amber The activity complies with all of the following criteria:
(transition)
 Unsegregated waste is received at the site and sorted before the organic
fraction is composted.
 Operations avoid methane leakage (e.g., proper aeration or mixing).
Ineligible The activity is described by any of the following.
 Waste is not segregated at the source or pre-sorted.
 There is not a proper aeration system.
 Compost quality is poor and is not suitable for application to soil.

DNSH Requirements
Promotion of circular economy
 Verify PEPA, 1997 for principles on management of hazardous and non-hazardous waste,
including compliance with the NEQS, established under PEPA, that play a vital role in waste
management, particularly in controlling discharge of pollutants into the environment.
 Use efficient equipment and technology that enable optimal use of organic solid waste to
ensure that it does not reach the final disposal site.
 Ensure that the resulting compost meets requirements for organic fertilizers established in
the national standards for fertilizers and soil improvers for agricultural use, such as the
National Bio-Safety Guidelines, the Organic Fertilizer Standards issued by the Pakistan
Standards and Quality Control Authority, and various provincial fertilizer acts (e.g., Punjab
Fertilizer Act, Sindh Fertilizer Ordinance).
Pollution prevention and control
 Minimize atmospheric emissions (e.g., ammonia, methane, formic acid, hydrogen sulfide,
particles) by using filters in the system.
 If effluents are disposed of within the sewer system because of the activity, discharge must
be in compliance with the technical regulation that applies.
 For composting plants that treat more than 75 tonnes per day, establish an emissions and
odor management plan and ensure that air and water emissions are within the ranges of
current regulations.

Sector Waste
Activity W3. Biowaste treatment: anaerobic digestion
ISIC/PSIC E3821
Description In anaerobic digestion, microorganisms decompose organic matter in an
environment without oxygen, transforming it into a less-polluting substance. As
part of an integrated waste management system, anaerobic digestion is a valid
way to divert biodegradable waste from landfills, reducing GHG emissions,
particularly methane. Under controlled conditions, the anaerobic digestion

70
 process produces biogas rich in methane and a liquid residue rich in nutrients
called digestate.
Some benefits that can be obtained from this system include:
 Minimization of GHGs generated at final disposal sites from degradation
of organic matter
 Generation of compost and fertilizers that can be used for different types
of crops, increasing carbon capture
 Generation of biogas for various activities, such as a source of fuel for
cooking and generating energy
Biogas can be used in multiple ways that displace fossil fuels. Digestate is
typically used on agricultural lands as an organic fertilizer, directly or after
composting. Using digestate instead of synthetic fertilizers derived from
byproducts of the oil industry saves energy and reduces consumption of fossil
fuels.
For treatment of food waste, kitchen scraps, and other similar biowastes,
anaerobic digestion offers better performance in mitigating climate change and
environmental impact than other forms of biological treatment, so it is
recommended to give it preference when technically and economically viable.
Objectives Climate change mitigation
Methodology Criteria
Green Anaerobic digestion of organic waste is directly eligible if it meets the following
criteria.
 The organic waste is separated at the source. An integrated management
plan must be established for the rejects.
 A monitoring and control plan for various products such as methane,
biogas, and digestate must be established to prevent leaks that pose a
health or environmental risk.
 The biogas must be used as an energy source for electricity or heat or
upgraded to biomethane for injection into the natural gas grid or use as
vehicle fuel or feedstock in the chemical industry.
 The digestate generated in these types of systems must be adequately
characterized to determine whether it meets maximum permissible limits
specified in national technical regulations and must be used as compost,
fertilizer, or raw material for composting.
 NEQS or Punjab environmental quality standards of PEPA and the Sindh
Waste to Energy Act must be conformed with if applicable.
Activities that facilitate use of biogas (e.g., drying, compression) are also eligible.
Amber Until 2030, the activity complies with all the following criteria.
(transition)
 Waste is presorted at the facility but not source separated.
 A monitoring and contingency plan is in place to minimize methane
leakage at the facility.
 The biogas produced is flared directly without using it as energy. Systems
that include only biogas flaring are eligible if they are part of a transition
program to other types of use in the medium term (<3 years).
The digestate produced must meet any of the following criteria.
 Biowaste (excluding sewage sludge) from single-digestion facilities is
used as fertilizer or soil improver, directly or after composting or any other
treatment as permitted under the applicable regulations.

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  Biowaste from anaerobic digestion of sewage sludge will be further
processed and not disposed of directly in landfills. Incineration is allowed
because it allows energy recovery, and the waste is converted to ash
after incineration and can be landfilled.
 Biowaste from co-digestion facilities must be processed further to ensure
resource recovery and cannot be disposed of directly.
Ineligible The activity meets any of the following.
 Waste is not source segregated or pre-sorted.
 No methane leakage detection system installed.
 Digestate is not used as fertilizer or soil improver or energy recovery (in
case of sewage sludge as a feedstock).

DNSH Requirements
Sustainable use and protection of water resources
 For discharge of effluents into surface waters or other water sources, PEPA 1997 and
amendments and the applicable NEQS must be complied with.
Promotion of circular economy
 Verify PEPA 1997 for principles on management of hazardous and non-hazardous waste,
including compliance with NEQS, established under PEPA, that play a vital role in waste
management, particularly in controlling discharge of pollutants into the environment.
 Use efficient equipment and technology that allow optimal use of solid waste through
anaerobic digestion to ensure that this waste does not reach the final disposal site.
Pollution prevention and control
 Minimize significant release of gases into the environment (e.g., ammonia, hydrogen sulfide,
CO2, particles) by using filters in the system and implementing devices for monitoring gas
leaks. Formation of hydrogen sulfide during anaerobic digestion constrains the valorization of
biogas and filters must be implemented for subbing such impurities in the biogas.
 Control and reduce air emissions (e.g., nitrogen oxides, sulfur oxides, particles) after biogas
combustion (when necessary) and ensure that they are within the limits set under the NEQS
established under PEPA.
 When the resulting digestate is intended to be used as fertilizer or a soil amendment, ensure
that it complies with the National Bio-Safety Guidelines, the Organic Fertilizer Standards
issued by the Pakistan Standards and Quality Control Authority, and applicable provincial
fertilizer acts (e.g., Punjab Fertilizer Act, Sindh Fertilizer Ordinance)

Sector Waste
Activity W4. Landfill gas capture and use
ISIC/PSIC E3821, E3822

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Description The activity is generally conducted as part of or as a complement to closure and
remediation of old landfills. The collection of landfill gas and its use for energy
helps mitigate climate change by:
 Reducing methane emissions to the atmosphere from biodegradable
waste previously deposited in landfills
 Displacing use of fossil fuels
Objectives Climate change mitigation
Methodology Criteria
Green The activity complies with all the following criteria.
 The landfill or landfill cell where the gas capture system is installed,
expanded, or modernized is permanently closed and no longer receives
waste.
 Landfill gas produced is used for electricity or heat generation as biogas,
transformed into biomethane for injection into the natural gas grid, used
as fuel for vehicles, or used as a raw material in the chemical industry.
 Methane emissions from the landfill and leaks from landfill gas collection
and use facilities are controlled and monitored.
Amber Until 2030, systems that include only biogas flaring (without use of the biogas)
(transition) are eligible if they are part of a transition program to other types of use in the
medium term (<3 years).
Ineligible The activity meets any of the following.
 Operational landfill cells that are receiving unprocessed municipal solid
waste
 Landfills where biogas is not captured or flared without use for generation
of heat or electricity or production of biomethane.

DNSH Requirements
Pollution prevention and control
 Old landfills where landfill gas capture systems are installed are closed, rehabilitated, and
cared for following national and international provisions (e.g., International Best Practices
Guide for Landfill Gas Energy Projects from the Global Methane Initiative).
 Atmospheric emissions (e.g., nitrogen oxides, sulfur oxides) after landfill gas combustion are
controlled, reduced (when necessary), and kept within the limits established by the NEQS
established under PEPA.

Sector Waste
Activity W5. Material recovery facilities
ISIC/PSIC E3830
Description Infrastructure and equipment to facilitate material separation and recovery.
Objectives Climate change mitigation

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Methodology Criteria
Green The activity complies with all the following criteria.
 Construction and operation of facilities for sorting and processing
separately collected non-hazardous waste streams into secondary raw
materials involving mechanical reprocessing except the backfilling
purposes is eligible.
 At least 50 percent of the weight of the collected materials is converted
into secondary raw materials.
The sorted waste may then be used as secondary raw material and substituted
for virgin materials in production processes.
All facilities and equipment such as conveyor belts, compactors, pelletizers, air
classifiers, magnetic belts, and other infrastructure required for material recovery
are eligible.
Amber The activity complies with all the following criteria.
(transition)
 The activity results in a recovery efficiency of at least 40 percent. The
sorted waste stream may then be converted into secondary raw materials
that can be substituted for virgin materials in production processes.
 All facilities must meet the Green criteria after 2030.
Ineligible • Recovery efficiency of the material recovery facility is less than 40 percent.

DNSH Requirements
N.A.

Sector Waste
Activity W6. Research and development—professional services
PSIC N.A.
Description This category includes research and development and implementation of
innovative solutions, processes, technologies, technical advice, and business
models designed to reduce, eliminate, or prevent GHG emissions. The ability of
these solutions to contribute significantly to the mitigation objective of the
activities of the waste sector must be demonstrated.
Objectives Climate change mitigation
Methodology Criteria
Green Creation of intangible assets and research, development, and innovation
activities designed to promote compliance with the substantial contribution
criteria of the taxonomy in the waste sector are considered directly eligible.
Some intangible assets and research, development, and innovation activities that
enable substantial contribution to climate change mitigation are:
 Development of waste recovery and recycling technologies for organic
and inorganic waste, including innovations in mechanical recycling,
chemical recycling, anaerobic digestion, and black soldier fly technologies
 Development of ICT for waste collection tracking and monitoring to
promote source segregation
 Development of technologies to treat non-recyclable fractions of waste,
including refuse-derived fuel technologies.

74
  Development and implementation of comprehensive operations and
maintenance protocol services

Water
The water sector is integrated into and interrelated to other sectors. Investments in the water sector
affect climate resilience, agricultural sustainability, energy generation, manufacturing processes,
and supply chains.
Pakistan has several national standards for design and construction of water and sanitation
systems.
 Pakistan Engineering Council standards for water supply and wastewater systems
 National Sanitation Policy, 2006, which provides guidelines for wastewater collection,
treatment, and disposal
 Pakistan Standard and Quality Control Authority, which sets standards for construction
materials used in water and sewer systems
 World Health Organization guidelines and Pakistani standards for drinking water quality,
which address factors such as turbidity, chemical contamination, and microbial safety
To address regulations specific to water use and management in Pakistan, it is essential to refer to
the provincial water acts. Each province in Pakistan has enacted its own water laws and regulations
to manage water resources effectively.
 Punjab Water Act, 2019
 Sindh Water Management Ordinance, 2002
 Khyber Pakhtunkhwa Water Act, 2014
The following activities are included in the taxonomy.
Activity ISIC/PSIC Code
W7. Construction, extension, and operation of new and existing water
E3600
collection, distribution, and treatment systems
W8. Construction and renewal of sanitary sewer systems E3700
W9. Wastewater treatment systems E3700
W10. Investments for efficient water use E3600
W11. Research and development—professional services N.A.

The technical information fact sheets for the selected activities are presented below.
Sector Water
Activity W7. Construction, extension, and operation of new and existing water collection,
distribution, and treatment systems
ISIC/PSIC E3600

75
Description Reducing energy consumption in a water supply system reduces GHG
emissions. Some alternatives to achieving this include using more-efficient
sources to replace those that demand more energy, implementing more-efficient
pumping sources, and managing technical water loss.
Some energy-efficiency measures can directly reduce energy consumption in a
water supply system, allowing for significant reductions in GHG emissions,
including:
 More-efficient sources to replace those that require more energy (e.g.,
using surface sources instead of groundwater sources through water
harvesting)
 More-efficient pumping systems
 Variable-frequency drives for pumps
 Digitalization and automation
For distribution systems, water loss management measures include:
 Active leakage control
 Flow and pressure management
 Rapid, effective repairs
 Infrastructure and asset management (including maintenance)
 Measurement and micro-measurement
 Monitoring and reporting
 Digitalization and automation
Objectives Climate change mitigation
Methodology Criteria
Green The activity must meet the corresponding criteria.
New systems
Abstraction and water treatment plants: Average net energy consumption for
intake (abstraction) and treatment is 0.5 kWh/m3 of water produced or less, or the
average carbon intensity of the energy for these systems is 100 gCO2/kWh or
less over the infrastructure's lifetime. Net energy consumption can take into
account measures that reduce energy consumption, such as source control
(contaminant load inputs) and, where appropriate, energy generation (e.g.,
hydropower, solar, wind).
Desalination: If a desalination plant is used, energy used for the systems must
have emissions of 100 gCO2e/kWh or less, or the energy consumption of the
plants must be less than 3.5 kWh/m3 of potable water produced.
Distribution and supply systems: Structural leaks have a threshold of 1.5 in
the management zone or network according to the Structural Leakage Index
(also referred to as Infrastructure Leakage Index). To achieve this, compliance
with the technical standards is required as a preventive measure.
Existing systems
Abstraction and water treatment plants: Reduce the average energy
consumption of the system by at least 20 percent compared to the reference
results averaged over three years in kWh/m3 of treated water supplied.
Distribution or supply systems: Reduce losses (Infrastructure Leakage Index)
by at least 20 percent in the network segment (management zone) compared
with the reference results averaged over the previous three years.

76
 Infrastructure Leakage Index = current annual real losses/unavoidable annual
real losses
Decentralized technologies for rural and urban areas
The following decentralized technologies are directly eligible
 Manual hand pumps or motorized pumps using renewable energy
 Solar-powered pumps for extraction from boreholes
 Gravity-fed systems where water is sourced from nearby rivers or springs
using gravity to move the water
 Rainwater harvesting systems for household and community-level
collection
 Water trucking in areas with no access to freshwater sources
 Remote monitoring of rural water systems (e.g., sensing of water in the
pump head, traditional flow sensor on pump outflow, sensing movement
of pump parts)
 Water automated teller machines (water kiosks)
 Slow and rapid sand filters for water treatment
All these systems must demonstrate access to safe water. This list should be
updated as new information is developed on decentralized technologies for
drinking water supply.
Amber For abstraction and treatment systems
(transition)
 Net average energy consumption for abstraction and treatment is equal to
or less than:
o 1.5 kWh/m3 of produced water supply by 2028
o 0.7 kWh/m3 of produced water supply by 2030
o 0.5 kWh/m3 of produced water supply by 2035
 Net energy consumption may consider the implementation of measures
that decrease energy consumption, such as source control (pollutant load
inputs) and, as appropriate, onsite or offsite energy generation (e.g.,
hydraulic, solar, wind).
For distribution or supply systems
 Structural leaks have a threshold of 2 in the management zone or network
according to the Structural Leakage Index (Infrastructure Leakage Index).
To achieve this, compliance with the technical standards is required as a
preventive measure.
Ineligible N.A.

DNSH Requirements
Promotion of circular economy
 Integrate efficient waste management into the project for sludge and other waste produced.
 Develop a water monitoring plan at the plant's inlet and outlet to maintain a record of water
quality.
Pollution prevention and control
 Verify that abstraction and water treatment plants comply with World Health Organization
guidelines and Pakistan Standards for Drinking Water Quality covering factors such as
turbidity, chemical contamination, and microbial safety.
 Ensure that projects are aligned with the National Water Conservation Strategy of the
Pakistan Council of Research in Water Resources and the Water Policy, 2018.
 Ensure that there is an adequate management plan for disposal and treatment of oils and
lubricants in addition to complying with applicable regulations.

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  Implement a management plan for chemicals or processes to avoid damage to water
sources, soil, and ecosystems.
Sustainable use and protection of water resources
 Catchment activities must be registered and studied and comply with the Water Accord,
1991; the Groundwater Management Ordinance, 2002; the principles of the Water Policy;
and the Indus Water Treaty, ensuring the natural flow of the resource.

Sector Water
Activity W8. Construction and renewal of sanitary sewer systems
ISIC/PSIC E3700
Description Sanitary sewer systems are designed to collect wastewater for pretreatment and
treatment systems. This activity should focus on increasing efficiency to reduce
energy consumption and increase collection of wastewater, thereby reducing
emissions that untreated discharge into water bodies generate. These systems,
which are connected to treatment systems, support coverage of wastewater
treatment services and consequently mitigate GHG emissions.
Objectives Climate change mitigation
Methodology Criteria
Green The following systems and technologies are eligible.
 Centralized and distributed effluent treatment systems that comply with
standards for construction materials used in water and sewer systems set
by the Pakistan Standard and Quality Control Authority
 Those that prevent leaks or overflows of untreated wastewater
 Collection and transportation systems that increase the volume of treated
or reduce the discharge of untreated wastewater
 Systems that reduce water consumption through reuse, including projects
to segregate municipal, stormwater, and industrial drainage for
specialized treatment
 Separation of stormwater and wastewater systems with the objective of
treating the wastewater
A monitoring plan that includes appropriate measures for climate change
adaptation through an integrated watershed, forest, and biodiversity management
plan must be established for each sanitary sewer system.
Amber N.A.
(transition)
Ineligible N.A.

DNSH Requirements
Promotion of circular economy
 There must be an adequate management plan for disposal and treatment of sludge and
waste.
Pollution prevention and control
 There must be an adequate management plan for disposal and treatment of oils and
lubricants.

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Sector Water
Activity W9. Wastewater treatment systems
ISIC/PSIC E3700
Description Wastewater treatment, or purification, consists of a series of physical, chemical,
and biological processes designed to eliminate contaminants in water. This
activity generates 3 to 7 percent of all GHG emissions, and it is estimated that 80
to 90 percent of these are released into the environment without being treated
[53].
This activity can help reduce these impacts by increasing the volume of treated
water and the efficiency of contaminant removal by including innovative
components that enable construction, expansion, and optimization of domestic
and industrial wastewater treatment systems.
Methane capture from sludge resulting from wastewater treatment is covered in
an activity of the waste sector.
Objectives Climate change mitigation
Methodology Criteria
Green The following substantial contribution criteria apply to these systems.
 Centralized wastewater treatment systems (e.g., municipal and clustered
population centers)
 Alternative or individual, decentralized wastewater treatment systems with
specific discharges (e.g., agricultural and industrial sources)
New systems must meet one of these criteria.
 The new wastewater treatment system replaces a high-GHG-emission
treatment system (e.g., pit latrine, septic tank, anaerobic lagoon). For
these criteria, it must be demonstrated that the new system achieves
GHG savings of at least 20 percent over the current system.
 The net energy consumption of the wastewater treatment plant is:
- 35 kWh or less per population equivalent per year for a treatment plant
capacity of less than 10,000 population equivalent per year
- 25 kWh or less per population equivalent per year for a treatment plant
capacity between 10,000 and 100,000 population equivalent per year
- 20 kWh or less per population equivalent per year for a treatment capacity
greater than 100,000 population equivalent per year
Existing systems must meet one of the following criteria.
 Investments that increase the capacity of the treated flow (when the
system meets the criteria established for new systems) or the
effectiveness in the process of contaminant load removal
 Investments that reduce energy consumption (kWh/m³) by at least 20
percent compared with the average performance of the reference over
three years or implement renewable energy that meets the criteria
established in the energy sector taxonomy
For anaerobic systems, such as upflow anaerobic sludge blanket digestion (new
and existing), the following additional substantial contribution criteria apply.
 Methane leakage from relevant facilities (e.g., in production and storage
of biogas, energy generation, digestate storage) is controlled through a
monitoring plan.

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  The biogas produced is used directly for electricity or heat generation, or
biomethane is used for injection into the natural gas grid, as fuel for
vehicles (e.g., bio–compressed natural gas), or as a raw material in the
chemical industry (e.g., for production of hydrogen and ammonia).
Activities that facilitate use of biogas, such as drying, compression, or similar
processes, are also eligible.
*1 PE = 60gDBO5/day
Decentralized technologies for rural and urban areas
Wastewater treatment in rural and urban areas can involve decentralized, low-
cost, energy-efficient technologies that can substantially mitigate climate change,
and these are directly eligible.
 Decentralized wastewater treatment systems that combine the following
technical treatment steps in a modular manner
o Primary treatment: septic tanks for individual households or small
communities, sedimentation ponds, settlers, Imhoff tanks
o Secondary treatment: in anaerobic baffled reactors, anaerobic
filters, or anaerobic and facultative pond systems
o Secondary aerobic or facultative treatment: in horizontal gravel
filters
o After treatment: in aerobic polishing ponds
 Constructed artificial wetlands for treatment of wastewater, such as:
o Free surface water constructed wetlands
o Vertical flow constructed wetlands
o Horizontal subsurface flow wetlands
 Bio-filtration systems using sand and gravel beds for filtration
 Waste stabilization ponds, which are inexpensive and effective for small
rural communities
 Moving-bed biofilm reactors for small-scale treatment systems
It is recommended that community-based sanitation programs that are site and
situation specific accompany these decentralized systems.
Amber Until 2030, net energy consumption of a wastewater treatment plant is 68 kWh or
(transition) less per equivalent population per year and is applicable to all wastewater
treatment plant capacities.
Until 2030, systems that include biogas flaring (without using the biogas) are
eligible only if they are part of a transition program to another type of use in the
medium term (<3 years).
Ineligible N. A

DNSH Requirements
For all treatment systems, a monitoring plan must be implemented that includes the following
points.
Pollution prevention and control
 Develop a water monitoring plan at the plant's inlet and outlet to maintain a unified record.
 Verify maximum allowable concentrations for chemical and biological pollutants set by PEPA
and NEQS regulations associated with the discharge of effluents into water bodies in
Pakistan.
 Develop a plan for managing solids and sedimentation.
Promotion of circular economy

80
  There must be an adequate management plan for disposal and treatment of sludge and
waste.

Sector Water
Activity W10. Investments for efficient water use
ISIC/PSIC N.A.
Description Efficient water use reduces demand for raw drinking water from original sources
and increases the efficiency of aqueduct and sewer systems. Water consumption
savings decreases demand for fresh water, reducing emissions associated with
water extraction, supply, and treatment, which reduces GHG emissions and
decreases the burden on water resources.
Objectives Climate change mitigation
Methodology Criteria
Green The activity must demonstrate compliance with one of the following criteria.
 Activities, systems, and technologies that generate at least a 25 percent
reduction in annual water consumption by economic activities, such as in
the construction sector, industrial processes, buildings with efficient
systems, and creation of various products or services
 Water reuse in closed systems with the aim of minimizing annual water
consumption by 25 percent within the facilities and recovering and reusing
water in processes (e.g., water-efficient fixtures, rainwater harvesting)
 Activities or systems that produce a minimum reduction of 20 percent in
annual water consumption per unit of product (e.g., reduction of 20
percent of water use per ton of beverage produced)
The distribution loss must be less than 10 percent for the segment of the
network.
Amber Until 2030, the following criteria are applicable.
(transition)
 Activities, systems, and technologies that generate at least a 15 percent
reduction in annual water consumption in economic activities, such as in
the construction sector, industrial processes, buildings with efficient
systems, and creation of various products or services
 Water reuse in closed systems with the aim of minimizing annual water
consumption by 15 percent within the facilities and recovering and reusing
water in processes (e.g., water efficient fixtures, rainwater harvesting).
 Activities or systems that produce a minimum reduction of 10 percent in
annual water consumption per unit of product (e.g., reduction of 20
percent of water use per ton of beverage produced)
The distribution loss must be less than 20 percent for the segment of the
network.
Ineligible N.A.

DNSH Requirements
N.A.

Sector Water

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 Activity W11. Research and development—professional services
ISIC/PSIC N.A.
Description Research; development and implementation of innovative solutions, processes,
and technologies; technical advice; and business models designed to reduce,
eliminate, or prevent GHG emissions and increase water efficiency. The ability of
these solutions to contribute significantly to the mitigation objective of the
activities of the water sector must be demonstrated.
Objectives Climate change mitigation
Methodology Criteria
Green Creation of intangible assets and research, development, and innovation
activities that have the objective of promoting compliance with the substantial
contribution criteria of the taxonomy in the water sector are considered directly
eligible.

Information and Communications Technology

It was projected that the ICT industry in Pakistan would reach $20 billion in sales by 2025 and that
urgent attention would be paid to computer literacy, increase the access of citizens to ICT tools and
to promote greater connectivity [54].
According to the Digital Policy of Pakistan, it is important that government databases and software
systems be able to share data and knowledge between themselves and with citizens. In addition,
strong ICT infrastructure that can transfer and share large amounts of data and strong cyber-
security measures to protect data related to national security that are required by the creation of
data center clusters at essential sites. A personal data protection bill has been drafted to regulate
how personal data are stored and processed, requiring data centers to adopt robust security
measures.
Pakistan’s digital policy of 2018 promotes digitalization of key socioeconomic sectors (e.g.,
agriculture, energy). Connectivity and digital transformation also have direct impacts on society and
the environment.
The following activities are covered in the taxonomy for the ICT sector.
Activity ISIC/PSIC Code
ICT1. Data processing, storage, transmission, and management J6311
ICT2. GHG-related solutions and software J6201, J6202

Sector Information and communications technology

Activity ICT1. Data processing, storage, transmission, and management
ISIC/PSIC J6311
Description Provision of infrastructure for data processing services and related activities,
specialized hosting activities such as web hosting, streaming services,
application hosting, application service provisioning, general time-share provision
of mainframe facilities to clients, data processing activities such as complete
processing of data supplied by clients or generation of specialized reports from
data supplied by clients, data entry services
Objectives Climate change mitigation

82
 Methodology Criteria
Green The activity is eligible if it meets all the following criteria.
 Data centers10 must have an energy use efficiency of less than 1.5 (power
usage effectiveness [PUE]11), or the power source for data centers must
have GHG emissions of less than 100 gCO2e/kWh in their lifecycle.
 The global warming potential of refrigerants used in the data center
cooling system must not exceed 675.
Retrofitting of existing facilities should also comply with the above criteria.
Verify the National Energy Efficiency and Conservation Authority Conservation
Policy 2023 to promote sustainable energy use for the ICT infrastructure,
encouraging energy-efficient practices.
Amber PUE of retrofitted data centers should be no more than 2.0 (criteria cut-off date:
(transition) 2030)
Ineligible N.A.

DNSH Requirements
The following is a general guide to measures that can be taken to correct or repair damage that
the project may cause to other environmental objectives (non-exhaustive list).
Promotion of circular economy
 A waste management plan is in place to ensure safe disposal of hazardous waste, including
e-waste, under PEPA, 1997. Other relevant e-waste regulations include E-waste
Management Standard Operating Procedures of June 2024 (Sindh), Development of
Standard Operating Procedures for E-waste Management Final Report of September 2023
(Punjab), and E-waste Management Plan Punjab Urban Land Systems Enhancement Project
(P172945).
Pollution prevention and control
 Pakistan's amendment to the Montreal Protocol restricts use of fluorinated gases. The
Pakistan Telecommunication Authority controls substances related to ICT equipment.

Sector Information and communications technology

Activity ICT2. GHG-related solutions and software
ISIC/PSIC J6201, J6202

10
Pakistan's Cloud First Policy is a government initiative to promote adoption of cloud computing in the public and private sectors so as to
prioritize cloud computing solutions for government services and ensure a secure, scalable, efficient ICT infrastructure. The Digital Pakistan
policy establishes Tier III and Tier IV standard data centers, including tax relief and subsidies for companies setting up data centers. These
policies do not include Energy Efficiency targets.
11
PUE is a metric used to determine the energy efficiency of a data center. It is determined by dividing the total amount of power entering
a data center by the power used to run the ICT equipment in it. PUE is expressed as a ratio, with overall efficiency increasing as the quotient
decreases toward 1.0 [76]. The PUE of data centers in Pakistan may vary because of outdated infrastructure, unreliable power supply, and
lack of knowledge about energy saving practices. Within the last 10 years, the PUE has improved when large-scale, tier-level data centers
were updated with the latest equipment, particularly by telecommunications companies.
A PUE of 1.0 is attainable under only the most favorable conditions and is difficult to achieve in Pakistan because of the above-mentioned
challenges, but data centers with state-of-the-art equipment with favorable external factors such as regular power supply achieve a PUE
between 1.2 and 1.5. Data centers in Pakistan have an average annual PUE of approximately 1.5.

83
Description Writing, modifying, testing, and supporting software; designing the structure and
content of and writing the computer code necessary to create and implement
systems software (including updates and patches), software applications
(including updates and patches), databases, and web pages; customizing
software (modifying and configuring an existing application so that it is functional
within the client’s information system environment); planning and designing
computer systems that integrate computer hardware, software, and
communication technologies; providing on-site management; and operating
clients’ computer systems and data-processing facilities, as well as related
support services
Example: Implementation of ICT hardware and software to increase the efficiency
of asset use and the flow and modal shift of transportation systems, regardless of
the transport mode.
Objectives Climate change mitigation and adaptation
Methodology Criteria
Green The activity is eligible if it meets one of the following criteria.
activities
 ICT solutions that are predominantly used to provide data and analysis
that enable GHG emission reductions or improve adaptation and
resilience data are directly eligible.
 When an alternative solution or technology is available on the market, the
data-driven solution and software demonstrates substantial lifecycle GHG
emission savings over the best-performing alternative solution or
technology. Certified products, systems, and technologies should comply
with technical standards for energy-efficient, low-emission technologies
set by the Pakistan Standards and Quality Control Authority.
An independent third party that transparently assesses how the standard criteria,
including those for critical review, have been followed when the value was
derived must verify quantified lifecycle GHG emission reductions.
Amber Until 2030, solutions and software that reduce the carbon footprint of the ICT
activities industry by reengineering ICT products and processes to increase their energy
(transition) efficiency, maximize their use, and minimize their carbon footprint to meet
national legal framework are eligible.
Ineligible N.A.
activities

DNSH Requirements
The following is a general guide to some measures that can be taken to correct or repair possible
damage that the project may cause to other environmental objectives (non-exhaustive list):
Promotion of circular economy
 A waste management plan is in place to ensure end-of-life recycling of electrical and
electronic equipment.
 At the end of its useful life, equipment undergoes preparation for reuse, recovery, or recycling
operations or appropriate treatment, including disposal of all fluids and selective treatment of
waste electrical and electronic equipment.
Pollution prevention and control
 Pakistan's amendment to the Montreal Protocol restricts use of fluorinated gases. The
Pakistan Telecommunication Authority controls substances related to ICT equipment.

84
Guide for Tourism Sector in the Taxonomy
Development of sustainable practices for the tourism sector should be applicable to all types of
practices and destinations, with the goal of finding a balance between economic, sociocultural, and
environmental factors. Ecotourism practices should also include low-impact activities developed
within natural areas and with the potential to contribute to their conservation.
PEPA, which governs ecotourism impacts in the country, and international benchmarks such as
those from the Global Sustainable Tourism Council were considered for development of this guide.
Although definitions and guidelines can be broad, it is possible to verify whether measures
implemented within the different opportunities areas offered by the tourism sector mitigate potential
environmental impacts and offer alternatives to make a substantial contribution to the country's
environmental and climate objectives.
Hence, Pakistan’s green taxonomy includes guidelines for ecotourism with practices that improve
the environmental performance of the tourism sector. Following are examples of activities
associated with the tourism sector that can be addressed in the green taxonomy. The impacts they
have on natural resources and their relationship with other productive sectors of the taxonomy are
identified for each of these activities.
Ecotourism is suitable for any place with natural wealth if sustainable and low-impact activities are
developed, promoting conservation and respect for local communities. Table 1 provides examples
of potential investments and their relationship with the sectors and activities covered under the
taxonomy.

Table 1. Guide for Tourism Sector—Ecotourism Investments

Examples of eligible Examples of associated Related taxonomy sectors and

investments environmental impacts eligible investments
Investments related The program is designed to Includes investments associated with
to the Protected increase conservation efforts to protection of areas in national parks
Area Initiative promote ecotourism. By 2023, such as Chitral and Gilgit-Baltistan.
program total protected areas in Pakistan
Practices contemplated in the
will be increased from 12 to 15
forestry sector, especially in activity
percent of protected areas, which
F3. Conservation, restoration and
will promote ecotourism,
maintenance of natural and pristine
although environmental impacts
forests, must be followed.
related to over-tourism in natural
destinations should be assessed
and managed.
The main objective of the
initiative is to facilitate promotion
and development of key wildlife
habitats across major national
parks for conservation and
ecotourism.
Development of Environmental impacts For investment in construction or
tourism associated with construction of renovation of a building in the tourism

85
infrastructure buildings such as hotels, sector to be considered green, it
(including restaurants, and other types of must meet criteria defined for the
buildings) infrastructure for tourism (e.g., construction sector (also considering
impact on ecosystems, pressure the individual measures that apply),
on water resources, increase in including compliance with do no
energy consumption, generation significant harm (see activities B1,
of GHG emissions) B2, B3 and B4).
Local materials, practices, and crafts
have been used in buildings and
design where practicable and
appropriate.
Waste from construction is sorted
and disposed of in an
environmentally sound manner.
Performance indicators for hotels and
accommodations for the Global
Sustainable Tourism Council could
be also consulted here: GSTC-
Industry-Criteria-for-Hotels-with-
SDGs.pdf.
Impacts related to obtaining raw For green investments associated
materials such as timber for with timber construction, it must be
construction activities of tourist ensured that raw materials are
facilities procured in compliance with practices
contemplated by the forestry sector in
the Taxonomy. (See activities F1 and
F2.)
Provision of utility Pollution from generation and Green investments associated with
services: energy, inadequate waste management management of waste derived from
water, and waste in in tourist facilities tourism service activities must be
the tourism sector aligned with the criteria of the waste
sector (e.g., waste collection and
transport, anaerobic digestion or
composting of organic waste)
Increase in energy demand and For green investments associated
emissions associated with with generation, transmission, and
expansion of electric power distribution of energy necessary for
services in tourism sector tourism sector activities, energy must
activities come from renewable sources or
comply with the emissions threshold
established in the energy sector of
100 gCO2/KWh. (See energy sector
activities that can be implemented in
the tourism sector.)
Increase in demand for drinking For investments associated with
water and generation of construction of drinking water or
wastewater related to installation wastewater treatment systems within
of drinking water and wastewater the tourism sector, thresholds
treatment systems for tourism established for activities under the
sector activities objective of mitigation or adaptation
to climate change (e.g., nature-based

86
 solutions, sustainable urban drainage
system, storm sewers), must be met.
(See activities in water sector for
mitigation and adaptation objectives.)
Passenger GHG emissions and air pollution Green investments associated with
transportation from activities related to purchase and operation of vehicles
transportation of tourists used to transport tourists and staff
must meet criteria of transportation
sector activities (e.g., zero-emission
direct vehicles, multimodal transport,
micromobility).
Construction and Risk of loss and damage from Investments associated with
operation of climate extreme weather events in tourist construction and operation of
information sites information and communications
communication technology infrastructure for timely
technology issuance of extreme weather
infrastructure for forecasts for tourists through mobile
tourists phones and internet are directly
eligible.
Retrofit of coastal Impact on coastal tourism Investments associated with retrofit
tourism properties infrastructure of extreme weather of coastal tourism properties in
to increase climate events identified vulnerable areas (e.g., low-
resilience lying beaches, other disaster-prone
areas) to increase climate resilience
are directly eligible.
Note: GHG, greenhouse gas.

Sectors and Activities that Contribute

Substantially to Climate Change Adaptation
Climate change in Pakistan has caused unprecedented natural disasters that are affecting
livelihoods, infrastructure, food security, and homes, among other things. Pakistan is ranked as the
eighth-most-affected country by climate change, according to the Global Climate Risk Index,
because of a notable increase in damage caused by floods, earthquakes, and storms.
Pakistan is highly vulnerable to the effects of climate change. For instance, it faces rates of warming
of 1.3°C to 4.9°C by the 2090s and greater frequency and intensity of floods, droughts, and extreme
events. Pakistan also faces some of the highest disaster risk levels in the world, ranked 18 out of
191 countries, with more than 32,596 total deaths from floods, tropical cyclones, and heat waves
from 1900 to 2020 [55].
The World Bank has estimated that total investment needs for a comprehensive response to
Pakistan's climate challenges between 2023 and 2030 are US$348 billion (10.7 percent of
cumulative GDP for the same period), 44 percent of which (US$152 billion) should be allocated to
adaptation and resilience [56]. These findings underscore the importance of making greater effort to
adapt to climate change.
Taxonomy focuses on solutions for adapted and enabling activities and measures.
The following is a first proposal of activities that can be included under the climate change
adaptation objective for Pakistan's green taxonomy, considering the following factors.

87
  Interoperability with other international and regional taxonomies
 Sufficient scientific evidence that the activity has a positive impact on climate change
adaptation
 The ambition of the objective is to ensure adaptation and resilience of sectors, assets, and
activities to the effects of climate change.
 Goals and priorities from the National Adaptation Plan
The taxonomy recommends three cases for classifying activities that have a substantial contribution
to the climate change adaptation objective:
Case 1. Economic Given their complexity, the economic activities and assets
activities with specific grouped in Case 1 must meet specific substantial contribution
substantial contribution criteria (metrics and thresholds) to determine their substantial
criteria to determine their contribution to the climate change adaptation objective.
substantial contribution to
The criteria for these adaptation-associated activities may have
the climate change
quantifiable or verifiable metrics (e.g., percentage savings in fresh
adaptation goal
water use, design of minimum return period for stormwater drains)
or may consider a list of qualitative requirements associated with
guidelines, standards, and regulations that may apply (e.g.,
nature-based solutions, wetland restoration). These criteria
ensure that there is sufficient flexibility to incorporate different
contexts (e.g., ecosystems, biomes) to ensure their applicability
across regions.
Case 2. Whitelist of eligible Whitelist of potentially eligible economic activities and measures
measures and activities that contribute substantially to climate change adaptation and
increase resilience
These are activities and measures for which risk of maladaptation
is low and eligibility can be demonstrated with simple technical
assessments to determine their substantial contribution,
demonstrating the reduction of climate risks or increase in
resilience.
Case 3: Other economic This is a transversal substantial contribution criteria to identify
activities and assets to other adapted activities and activities that enable adaptation
determine their substantial for all sectors for activities and measures that are not covered in
contribution to the climate the previous two cases.
change adaptation
As adaptation to climate change is specific to each context and
objective (based on
region, this option can be applied to activities across all sectors.
vulnerability assessments)
Qualitative or quantitative assessments of climate risks should be
based on the best available information on potential climate
impacts and threats (observed and future changes), as well as
exposure levels and the sensitivity and adaptive capacity of the
project, to identify robust, effective climate change adaptation
measures.

The taxonomy includes adapted and adaptation-enabling activities and measures.

 Adapted activities: Activities that address the effects of climate change to increase resilience
without hampering the adaptation efforts of other people, activities, or assets
 Enabling activities and measures: Activities and measures that increase the resilience of
other economic activities and adaptation in advance of climate change effects
Economic activities and measures for various sectors under the taxonomy (Case 1 or 2) are listed in
Box 1. The technical criteria for Case 3 activities that can be applied across all sectors are shown.

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Box 1. Climate Risk Assessment

For activities and measures whose criteria require a risk assessment to demonstrate their climate
risk mitigation and resilience enhancement, quantitative and qualitative technical analysis could
be applied if the project is considered high risk. A qualitative analysis should be considered for
low- to moderate-risk projects.
Some key frameworks and models for climate risk assessment are shown below.
 National policy guidelines for the conduct of multi-hazard vulnerability and risk
assessment set standard benchmarks for procedures to be followed, outlining datasets
and tools that should be used to conduct such assessments.
 Natural catastrophe models provide probabilistic risk modeling covering nine different
hazards based on the return period and services acquired from the Pakistan Space and
Upper Atmosphere Research Commission.
 The national climate change policy framework identifies key climate risks, including
extreme weather events, glacial melting, and water scarcity, and includes a vulnerability
assessment of the water, agricultural, energy, and health sectors.
 The national disaster risk management framework, which the National Disaster
Management Authority developed, focuses on climate risk assessments for disaster-prone
areas, including hazard mapping, early warning systems, and community-based risk
assessments.
 Risk assessment standards (ISO 14090 [Adaptation to Climate Change], ISO 31000 [Risk
Management]) provide a structured approach to identifying, assessing, and managing
climate risks.
Listed below are some of the most common climate hazards in Pakistan and methodologies that
can be used for hazard-specific assessments.
 Flood risk assessment: Hydrologic Engineering Center River Analysis System and the
hydrodynamic modeling software MIKE Flood to simulate flood scenarios
 Glacial and snowmelt risks: Glacial Lake outburst flood risk analysis in the Karakoram and
Himalayan regions under the Glacial Lake Outburst Flood-II Project of the United Nations
Development Program and the Ministry of Climate Change
 Heatwave and urban climate risks: Karachi’s Heatwave Management Plan, which
integrates risk assessment into public health responses
 Drought risk assessment: Tools such as the Standardized Precipitation Index and Palmer
Drought Severity Index to monitor and analyze drought conditions
Indicators to assess during risk and vulnerability studies may vary depending on sector, activity,
location, and context, although they should respond to the impacts that may occur, such as:
 Economic: Loss of value of assets, loss of income
 Social: Population displacement, negative health effects, gender inequality,
socioeconomic inequality, limited availability of and access to social and informational
resources
Environmental: Loss or degradation of ecosystems and their services, biodiversity

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Water
The water sector is extremely vulnerable to climate change and can adversely affect other sectors
(e.g., reduced rainfall leads to agricultural losses in agriculture).
Water security plays a pivotal role in bolstering Pakistan´s economy. Groundwater supplies 90
percent of domestic water in rural Pakistan and 70 percent nationally (Ministry of Climate Change
and Environmental Coordination 2023).
Adaptation activities and measures under Case 1 and Case 2 for the water sector are listed below.
Adaptation investments for water sector (Case 1)
Activity Criteria
WA1. Efficient water use The following activities, systems, and technologies are
investments eligible.
Savings in water consumption  Those that reduce annual water consumption of
decrease demand for fresh water, economic activities by at least 25 percent, for
which reduces the load on water example, in the construction sector, industrial
resources and increases the processes, buildings with efficient systems,
country's water security. creation of different products or services
 Recovery or water reuse processes in closed
systems with the aim of minimizing annual water
consumption within the facilities by 25 percent
 Those that produce a minimum reduction of 20
percent in annual water consumption per unit of
product
DNSH requirements: Projects must be in line with
national regulations: National Water Conservation Strategy
for Pakistan and Pakistan's National Water Policy.
WA2. Ecosystem improvement The activity is eligible if it meets the following criteria:
projects in water catchment areas
 Forest management plan or equivalent instrument:
(mainly in the Indus River basin)
The activity takes place in an area that is subject to
These types of projects are a forest management plan or equivalent
designed to generate better management instrument that demonstrates a clear
conditions for water catchment objective of soil and water protection, biodiversity
areas for the supply of the conservation, and related ecosystem services,
population. Activities such as including social issues (Annex 4). It includes an
conservation of watersheds, analysis of impacts and pressures on habitat
increase in forest cover, and conservation, logging conditions, and the impacts
monitoring of water quality are of other activities that affect conservation
integrated, among other actions objectives, such as hunting and fishing; agricultural,
whose main objective is to pastoral, and forestry activities; and industrial,
improve soil quality to promote mining, and commercial activities in the project
supply and filtration of water to area.
aquifers, in addition to
All the projects should follow the guidelines of the
contributing to generation of
National Forest Law and Policies in Pakistan, including
carbon sinks.
the Sustainable Forest Management to Secure Multiple
Benefits in Pakistan’s High Conservation Areas project
of the Ministry of Climate Change and Environmental
Coordination.12

12
This project focuses on seven forest landscapes (145,300 hectares) containing three vulnerable and important forest types: temperate
coniferous forests in Khyber Pakhtunkhwa, dry scrub forests in Punjab, and riverine forests in Punjab and Sind.

90
 The forest management plan or equivalent instrument
covers a period of 10 years or more and is continuously
updated. The activity does not involve degradation of
lands with high carbon stocks.
The forest management plan or equivalent instrument
provides for monitoring to ensure the accuracy of the
information contained in the plan regarding data
relating to the affected area.
 Audit: Within 2 years of the start of the activity and
every 10 years thereafter, compliance of the activity
with the criteria of substantial contribution to the
environmental objectives is verified by any of the
following.
o Competent national authorities
o An independent third-party certifier, at the
request of the national authorities or the
operator of the activity. To reduce costs,
audits can be conducted in conjunction with
any forestry or climate certification or other
audit. The independent third-party certifier
must not have any conflict of interest with
the owner or the funder and must not be
involved in development or operation of the
activity.
 Group assessment: Compliance with positive
impacts may be verified at the level of a sufficiently
homogeneous group of participants to assess the
sustainability risk of the forestry activity, provided
that all participants have a longstanding
relationship with each other and participate in the
activity and that the group of those holdings
remains the same for all subsequent audits.
Personnel qualified in restoration or preservation of
functioning of ecosystems must conduct projects.
DNSH requirements: Projects must be in line with
national regulations: National Water Conservation Strategy
for Pakistan and Pakistan's National Water Policy
WA3. Stormwater management Large-scale projects (>1,500 inhabitants)
Stormwater is natural  Systems should be designed considering changes
precipitation. Effective in climate, rainfall regime, and intensity (review
stormwater management relies criteria established under Case 3 in the chapter for
on adequate provision for adapted activities).
stormwater runoff mitigation and  For construction of these systems, refer to the
transport and water quality National Water Policy and the Building Code of
treatment. Pakistan
Small-scale projects (<1,500 inhabitants)
 Systems should be designed considering changes
in climate, rainfall regime, and intensity (review
criteria established under Case 3 in the section on
adapted activities).
 Systems should be prioritized based on the use of
green infrastructure such as sustainable urban

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 drainage systems. (These systems must comply
with criteria for the activity of sustainable urban
drainage systems in WA6.)
DNSH requirements: A management plan must be in
place for waste, sludge, or sediment generated in the
system (pollution prevention and control).
WA4. Nature-based systems for The activity is eligible if it meets the following criteria.
prevention of and protection
 The activity is identified as a flood- or drought-risk-
against drought or flooding
reduction measure in a river basin–scale water use
Nature-based water resource and protection management plan or coastal
management systems that are integrated zone management plan. These plans
managed to collect, store, treat, pursue flood and drought risk management
or distribute water or to buffer objectives to reduce adverse consequences, where
floods or droughts include appropriate, for human health, the environment,
natural and nature-based cultural heritage, and economic activity.
features, processes, and  The risks of environmental degradation related to
functions as an integral part of preservation of water quality, prevention of water
responding to water-related stress, and prevention of deterioration of the status
needs. of the affected water bodies are identified and
addressed to achieve good water status and good
ecological potential in accordance with a river basin
management plan developed for potentially
affected water body(s) in consultation with relevant
stakeholders.
 The activity includes nature restoration or
conservation actions with specific benefits to the
ecosystem and a clearly defined timeline. Local
stakeholders are involved in the planning and
design phase. The activity considers the National
Biodiversity Strategy and Action Plan and the 2022
Pakistan Floods Response Plan
 A monitoring program is in place to evaluate the
effectiveness of a nature-based solutions plan in
improving the status of the affected water body,
achieving conservation and restoration goals, and
adapting to changing climate conditions. The
program is revised following the regular approach
of river basin management plans (including drought
management plans, where appropriate) and flood
risk management plans.

DNSH requirements
 The activity does not imply degradation of the
terrestrial and marine environment with high carbon
stocks (climate change mitigation). Measured
through an environmental impact assessment or
similar study.
 The activity is not detrimental to recovery or
maintenance of populations of protected species or
affected and protected habitats and prevents

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 introduction of invasive alien species or manages
their spread (protection of healthy ecosystems and
biodiversity).
 Construction of any civil works must have a
construction and demolition waste management
plan ensuring implementation of best
environmental practices.
WA5. Wetland restoration The activity is eligible if it meets the following criteria.
Wetland restoration allows the  Restoration Plan: the area is covered by a
recovery of ecosystems for restoration plan that is consistent with the principles
various purposes: conservation and guidelines of the Ramsar Convention on
of diversity, creation of habitat, wetland restoration; complies with the Pakistan
improvement of water quality, National Wetlands policy; carefully considers local
protection of coastal zones and hydrological and soil conditions, including dynamics
even productive projects. For of soil saturation and changing aerobic and
some of these purposes, anaerobic conditions; and provides for monitoring
restoration of physical conditions to ensure accuracy of information contained in the
of the site may be sufficient to plan regarding data related to the area involved.
allow hydrophilic vegetation to be  Climate benefits analysis: a climate benefits
established; in other cases it is analysis is conducted that demonstrates a net
necessary to modify additional balance of GHG emissions and removals
parameters, including generated by the restoration activity over a 30-year
topography and substrate period (project scenario) compared with a baseline
characteristics, and even to reference year in the absence of the restoration
introduce species. activity (actual scenario). The analysis of climate
benefits is based on transparent, accurate,
consistent, complete, comparable information and
covers all carbon pools (including aboveground
biomass, groundwater biomass, dead wood, leaf
litter, soil). For coastal wetlands, the climate
benefits analysis considers projections of projected
relative sea-level rise and the potential for wetlands
to migrate.
 Guarantee of permanence: the permanence of
the wetland condition of the area in which the
activity takes place is guaranteed by one of the
following measures.
o The area is designated to be conserved as
a wetland and cannot be converted to other
land use.
o The area is classified as a protected area.
o The area is subject to a legal or contractual
guarantee that it will remain a wetland.
 Audit: Within 2 years of the start of the activity and
every 10 years thereafter, compliance of the activity
with the criteria of substantial contribution to the
environmental objectives is verified by any of the
following.
o The competent national authorities
o An independent third-party certifier at the
request of the national authorities or the
operator of the activity. To reduce costs,
audits can be performed in conjunction with

93
 any forestry, climate certification, or other
audit. The independent third-party certifier
must not have any conflict of interest with
the owner or the funder and must not be
involved in development or operation of the
activity.
 Stakeholder assessment: Compliance with
positive impacts may be verified at the level of a
sufficiently homogeneous group of stakeholders to
assess the sustainability risk of the forestry activity,
provided that all participants have a long-standing
relationship with each other and participate in the
activity and that the group of those holdings
remains the same for all subsequent audits.
Personnel qualified in restoration or preservation of the
functioning of ecosystems must conduct projects.
DNSH requirements: Projects must be in line with
national regulations: Pakistan National Wetlands Policy,
Pakistan Wetlands Program, and National Biodiversity
Strategy and Action Plan.
WA6. Sustainable Urban Drainage The activity leads to stormwater retention in a specific area
Systems or an improvement in water quality and must meet the
following criteria.
Sustainable urban drainage
systems are stormwater  Construction and operation of sustainable urban
management and urban planning drainage systems are integrated into urban
techniques designed to reduce drainage and wastewater treatment systems. In
the amount of water in the final addition, it should be demonstrated through a flood
discharge and improve the risk management plan or other relevant urban
quality of the water discharged planning instruments that the activity contributes
into the natural environment, substantially to achieving the good status and
achieving integrated water cycle ecological potential of surface and groundwater
management solutions linked to bodies or to preventing deterioration of water
environmental protection of bodies that already have good status.
receiving waters. This activity
Design of the sustainable urban drainage system achieves
includes construction,
at least one of the following effects.
expansion, operation, and
renovation of facilities of these  A quantified percentage of the stormwater in the
systems. catchment area of the drainage system is retained
and discharged with a staggered delay into
receiving water bodies.
 A quantified percentage of pollutants, including oils,
heavy metals, and hazardous chemicals, is
removed from urban runoff before discharge into
receiving water bodies.
 The maximum runoff flow is reduced by a
quantified percentage, with a return period in line
with the requirements of flood risk management
plans or other local provisions in force.
DNSH requirements: Projects must be in line with
national regulations: 2022 Pakistan Floods Response
Plan.

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Adaptation activities and measures for the Water Sector (Case 2)
WA7. Rainwater harvesting  Automatically eligible
systems
WA8. Expansion of stormwater  Demonstrate climate risk reduction or resilience
systems for rainwater conduction, enhancement through a qualitative study (in case of
considering the effects of climate low or moderate risk to the asset or activity) or a
change, such as an increase in qualitative or quantitative assessment (in case of
rainfall intensity high risk to the asset or activity).
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
WA9. Aquifer recharge system with  Demonstrate climate risk reduction or resilience
treated rainwater enhancement through a qualitative study (in case of
low or moderate risk to the asset or activity) or a
qualitative or quantitative assessment (in case of
high risk to the asset or activity)
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
 Establish a risk mitigation plan.
WA10. Improvements in  Demonstrate climate risk reduction or resilience
stormwater treatment enhancement through a qualitative study (in case of
infrastructure such as sludge low or moderate risk to the asset or activity) or a
settling systems and removal of qualitative or quantitative assessment (in case of
pollutants and waste high risk to the asset or activity)
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
WA11. Remote water quality Refer to the criteria under the ICT sector if applicable.
monitoring systems, including On the contrary,
snow cover and remote sensing  Demonstrate climate risk reduction or resilience
enhancement through a qualitative study (in case of
low or moderate risk to the asset or activity) or a
qualitative or quantitative assessment (in case of
high risk to the asset or activity)
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
WA12. Massification of drip  Demonstrate climate risk reduction or resilience
irrigation systems in the enhancement through a qualitative study (in case of
agricultural sector low or moderate risk to the asset or activity) or a
qualitative or quantitative assessment (in case of
high risk to the asset or activity)

95
  Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
WA13. Installation and operation of  Demonstrate climate risk reduction or resilience
water management system for enhancement through a qualitative study (in case of
agricultural use in freshwater- low or moderate risk to the asset or activity) or a
stressed districts (including qualitative or quantitative assessment (in case of
rainwater collection, water high risk to the asset or activity)
recycling, flood-proof  Consider all material hazards, and establish an
warehousing) adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
WA14. Protection of nature and  Demonstrate climate risk reduction or resilience
natural capital (e.g., wetlands; and enhancement through a qualitative study (in case of
RAMSAR sites;13 marine and low or moderate risk to the asset or activity) or a
coastal ecosystems [e.g., qualitative or quantitative assessment (in case of
mangrove forests; salt marshes; high risk to the asset or activity).
estuaries; freshwater, brackish,  Consider all material hazards, and establish an
and saline lagoons; dune systems; adaptation plan to demonstrate that the measure or
salt or mudflats; rocky coasts; activity mitigates the assessed climate risks over the
barrier islands; meadows; and lifetime of the project or investment.
seagrass beds])
WA15. Water management and  Demonstrate climate risk reduction or resilience
storage (e.g., reservoirs, rainwater enhancement through a qualitative study (in case of
harvesting, runoff-harvesting low or moderate risk to the asset or activity) or a
technologies) qualitative or quantitative assessment (in case of
high risk to the asset or activity).
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
WA16. Monitoring and Automatically eligible
meteorological systems (e.g., to
monitor weather phenomena)
WA17. Early warning systems for Automatically eligible
storms, droughts, floods or dam
failure, and water quality or
quantity monitoring processes
WA18. Wastewater treatment  Demonstrate climate risk reduction or resilience
systems with nature-based enhancement through a qualitative study (in case of
solutions such as artificial low or moderate risk to the asset or activity) or a
wetlands qualitative or quantitative assessment (in case of
high risk to the asset or activity).
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.

13 Astola Island, Indus Delta, Jiwani, Miani Hor, Nariri-Jaboh Lagoon, Ormara Turtle Beach, Rann of Kutch

96
 WA19. Investments to increase the  Demonstrate climate risk reduction or resilience
resilience of drinking and enhancement through a qualitative study (in case of
wastewater infrastructure low or moderate risk to the asset or activity) or a
qualitative or quantitative assessment (in case of
high risk to the asset or activity).
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
WA20. Emergency systems for  Demonstrate climate risk reduction or resilience
water storage and distribution enhancement through a qualitative study (in case of
low or moderate risk to the asset or activity) or a
qualitative or quantitative assessment (in case of
high risk to the asset or activity).
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
WA21. Capacity enhancement and  Demonstrate climate risk reduction or resilience
awareness raising for water enhancement through a qualitative study (in case of
management low or moderate risk to the asset or activity) or a
qualitative or quantitative assessment (in case of
high risk to the asset or activity).
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
DNSH requirements (applicable to all activities and measures)
Requirement Description
DNSH Substantial contribution to climate change adaptation must not hinder other
environmental objectives of the taxonomy. If such impacts are identified, a
corresponding risk mitigation plan must be in place.
Eligible activities and measures must comply with the local regulatory framework
and policies relevant to their activity and the territory in which they are conducted
and have an environmental management system in place.
Implementing entities of economic activities or measures or asset owners must
confirm the existence of a management system commensurate with the size of
the investment and the scale of the project.

Mitigate or The eligible activity or measure must not generate a social harm. It must adhere
avoid to the relevant local regulatory framework and policies and have a social
adverse management system in place.
social
impacts

97
Transportation
Materialization of physical risks arising from climate change may affect the transportation sector. To
reduce the effects of climate change, the transportation sector must be resilient to the impacts of
extreme weather conditions and adapt accordingly.
The transportation sector has no activities under Case 1, but activities and measures under Case 2
are shown below.
Adaptation investments for transportation sector (Case 2)

TA1. Investments in improving the  Demonstrate climate risk reduction or resilience

physical resilience of transportation enhancement through a qualitative study (in case of
systems and infrastructure to low or moderate risk to the asset or activity) or a
extreme weather events (e.g., qualitative or quantitative assessment (in case of
improving road drainage to prevent high risk to the asset or activity).
damage from excessive rainfall)  Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
TA2. Restoration of transportation  Demonstrate climate risk reduction or resilience
infrastructure after extreme events enhancement through a qualitative study (in case of
considering the climate vulnerability low or moderate risk to the asset or activity) or a
qualitative or quantitative assessment (in case of
high risk to the asset or activity).
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
TA3. Research and studies to Automatically eligible
determine vulnerability factors in
transportation networks that may
affect nodes, lines, and operations
and identification of possible
interventions to reduce such
impacts
TA4. Updating of building  Demonstrate climate risk reduction or resilience
standards, maintenance practices, enhancement of the improved standards or policies.
and other elements, incorporating  Consider all material hazards, and establish an
strategies to enhance resilience adaptation plan to demonstrate that the measure or
activity mitigates the assessed climate risks over the
lifetime of the project or investment.
TA5. Development of airport  This infrastructure must use low-carbon energy and
infrastructure in isolated areas for vehicle fleets that meet the mitigation thresholds
establishing connectivity within defined in the transportation sector for their
communities when other modes operations.
such as land, rail, and river are  Demonstrate climate risk reduction or resilience
inadequate enhancement through a qualitative study (in case of
low or moderate risk to the asset or activity) or a
qualitative or quantitative assessment (in case of
high risk to the asset or activity).
 Consider all material hazards, and establish an
adaptation plan to demonstrate that the measure or

98
 Adaptation investments for transportation sector (Case 2)

activity mitigates the assessed climate risks over the

lifetime of the project or investment.

DNSH requirements (applicable to all activities and measures)

Requirement Description
DNSH The substantial contribution to climate change adaptation must not harm other
environmental objectives of the taxonomy. If such impacts are identified, a
corresponding risk mitigation plan must be in place.
Eligible activities and measures must comply with the local regulatory framework
and policies relevant to their activity and the territory in which they are conducted
and have an environmental management system in place.
Implementing entities of economic activities or measures or asset owners must
confirm the existence of a management system commensurate with the size of
the investment and the scale of the project or entity implementing the funding.
Mitigate or The eligible activity or measure must not generate social harm. To this end, it
avoid must adhere to the relevant local regulatory framework and policies and have a
adverse social management system in place.
social
impacts

Information and Communications Technology

The ICT sector plays an important role in helping other sectors and activities adapt to climate
change and making systems resilient. Connectivity and digital transformation also have direct
impacts on societies and the environment.
Some of the impacts of climate change could affect sector activities and areas in which the ICT
sector can play an important role in adaptation.
Adaptation activities and measures under Case 1 and Case 2 for ICT sector are listed below.

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Adaptation investments for ICT sector (Case 1)
Activity Criteria
ICTA1. Telecommunication The activity is eligible if it meets one of the following criteria.
systems
 All telecommunications systems that improve connectivity
Telecommunication systems or those used for implementation of solutions related to
are crucial to establish climate change mitigation (e.g., digital solutions to increase
connections during weather efficiency of energy grids) or adaptation to climate change
emergencies and to provide (e.g., antennas and networks to establish early warning
digital services to systems related to climate disasters) are eligible.
communities. These systems  Increases resilience of telecommunications infrastructure,
often use stand-alone fossil demonstrating the reduction of climate risks or increase in
fuel generators to operate resilience through a quantitative and qualitative technical
power, so transitioning to analysis whenever feasible
alternative sources such as
low-carbon clean energy DNSH requirements
would help reduce GHG  Cellular radio bases with more-efficient technologies than
emissions. existing systems and modernization of existing equipment
and therefore reduction in electricity consumption based on
demand
 Energy used for telecommunications systems must come
from sources that meet the requirements set out in the
energy sector in Pakistan’s Green Taxonomy.
 A waste management plan to ensure end-of-life recycling of
electrical and electronic equipment (promotion of circular
economy)
 At the end of its useful life, equipment undergoes
preparation for reuse, recovery, or recycling operations or
appropriate treatment, including disposal of fluids and
selective treatment of waste electrical and electronic
equipment (promotion of circular economy).

Adaptation investments for ICT Sector (Case 2)

ICTA2. Power demand  Demonstrate climate risk reduction or resilience
management of data centers enhancement through a qualitative study (in case of low or
and reduction in their moderate risk to the asset or activity) or a qualitative or
vulnerability to climate quantitative assessment (in case of high risk to the asset or
change activity).
 Consider all material hazards and establish an adaptation
plan to demonstrate that the measure or activity mitigates
the assessed climate risks over the lifetime of the project or
investment.

100
 ICTA3. Disaster warning and Automatically eligible
monitoring systems (e.g.,
forest fires, hurricanes)
ICTA4. Intelligent data Automatically eligible
collection, monitoring,
analysis, automation, climate
modeling, forecasting for
early warning systems, and
decision making
ICTA5. Climate modeling,  Demonstrate climate risk reduction or resilience
planning, and increasing enhancement through a qualitative study (in case of low or
resilience of urban moderate risk to the asset or activity) or a qualitative or
infrastructure quantitative assessment (in case of high risk to the asset or
activity).
 Consider all material hazards and establish an adaptation
plan to demonstrate that the measure or activity mitigates
the assessed climate risks over the lifetime of the project or
investment.
ICTA6. Climate change Automatically eligible
research, climate change
scenario modeling, urban
and coastal flood simulation,
climate risk analysis
(vulnerability, exposure and
hazard mapping)
ICTA7. Installation of thermal  Demonstrate climate risk reduction or resilience
insulation in data centers to enhancement through a qualitative study (in case of low or
mitigate high temperatures moderate risk to the asset or activity) or a qualitative or
(refer to substantial quantitative assessment (in case of high risk to the asset or
contribution criteria for data activity).
center activity in the ICT  Consider all material hazards and establish an adaptation
sector) plan to demonstrate that the measure or activity mitigates
the assessed climate risks over the lifetime of the project or
investment.
ICTA8. Construction and  Demonstrate climate risk reduction or resilience
operation of climate ICT enhancement through a qualitative study (in case of low or
infrastructure for agricultural moderate risk to the asset or activity) or a qualitative or
productivity quantitative assessment (in case of high risk to the asset or
activity).
 Consider all material hazards and establish an adaptation
plan to demonstrate that the measure or activity mitigates
the assessed climate risks over the lifetime of the project or
investment.
ICTA9. Modernization of  Demonstrate climate risk reduction or resilience
adequate water pricing (e- enhancement through a qualitative study (in case of low or
Abiana framework14) by moderate risk to the asset or activity) or a qualitative or
digitizing the e-Abiana quantitative assessment (in case of high risk to the asset or
assessment and collection activity).

14
e-Abiana is a digital mechanism for collection of water charges and fines that the Punjab Information Technology Board developed for
the Punjab Irrigation Department (see e-Abiana System Developed by PITB for Punjab Irrigation Department | PITB ).

101
 system and creating a  Consider all material hazards, and establish an adaptation
financial diversification plan to demonstrate that the measure or activity mitigates
program for irrigation the assessed climate risks over the lifetime of the project or
departments to increase investment.
revenue

DNSH requirements (applicable to all activities and measures)

Requirement Description
DNSH The substantial contribution to climate change adaptation must not hamper the
other environmental objectives of the taxonomy. If such impacts are identified, a
corresponding risk mitigation plan must be in place.
Eligible activities and measures must comply with the local regulatory framework
and policies relevant to their activity and the territory in which it is conducted and
have an environmental management system in place.
Implementing entities of economic activities or measures or asset owners must
confirm the existence of a management system commensurate with the size of
the investment and the scale of the project.
Mitigate or The eligible activity or measure must not generate social harm. To this end, it
avoid must adhere to the relevant local regulatory framework and policies and have a
adverse social management system in place.
social
impacts

Construction
The construction sector must increase its capacity to mitigate the expected impact of climate
change. Adaptation strategies are strictly related to the context in which buildings are located. The
construction sector has no activities under Case 1, but the activities and measures under Case 2
are shown below:

Adaptation investments for construction sector (Case 2)

CA1. Design and  Demonstrate climate risk reduction or resilience enhancement

construction of bioclimatic through a qualitative study (in case of low or moderate risk to
buildings (including the asset or activity) or a qualitative or quantitative
resilient health and assessment (in case of high risk to the asset or activity).
education infrastructure)  Consider all material hazards, and establish an adaptation
and urban-scale plan to demonstrate that the measure or activity mitigates the
interventions that adapt to assessed climate risks over the lifetime of the project or
the effects of climate investment.
change (e.g., floods,
extreme temperatures,
droughts)
CA2. Reinforcement and  Demonstrate climate risk reduction or resilience enhancement
stability of buildings to through a qualitative study (in case of low or moderate risk to
withstand hurricanes and

102
severe storms or other the asset or activity) or a qualitative or quantitative
climate change effects assessment (in case of high risk to the asset or activity).
 Consider all material hazards, and establish an adaptation
plan to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
CA3. Improvement of Refer to the criteria for stormwater management in the water
drainage systems (to sector if applicable. On the contrary,
consider changes in  Demonstrate climate risk reduction or resilience enhancement
rainfall regimes) through a qualitative study (in case of low or moderate risk to
the asset or activity) or a qualitative or quantitative
assessment (in case of high risk to the asset or activity).
 Consider all material hazards, and establish an adaptation
plan to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
CA4. Increase in green  Automatically eligible. For activities related to sustainable
spaces to reduce heat urban drainage system, refer to sustainable urban drainage
accumulation, rainwater system criteria in the water sector.
harvesting, and surface
runoff
CA5. Implementation of  Demonstrate climate risk reduction or resilience enhancement
green infrastructure to through a qualitative study (in case of low or moderate risk to
reduce landslide and flood the asset or activity) or a qualitative or quantitative
risks (avoidance of assessment (in case of high risk to the asset or activity).
building in areas with high  Consider all material hazards, and establish an adaptation
probability of flooding or plan to demonstrate that the measure or activity mitigates the
wildfires) assessed climate risks over the lifetime of the project or
investment.
CA6. Water management,  Demonstrate climate risk reduction or resilience enhancement
collection, and recycling to through a qualitative study (in case of low or moderate risk to
compensate for water the asset or activity) or a qualitative or quantitative
scarcity assessment (in case of high risk to the asset or activity).
 Consider all material hazards, and establish an adaptation
plan to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
CA7. Adaptation to existing  Demonstrate climate risk reduction or resilience enhancement
buildings or intervention to through a qualitative study (in case of low or moderate risk to
reduce inefficiency in use the asset or activity) or a qualitative or quantitative
of resources such as assessment (in case of high risk to the asset or activity).
energy and water (meeting  Consider all material hazards, and establish an adaptation
criteria that construction, plan to demonstrate that the measure or activity mitigates the
energy, and water sectors assessed climate risks over the lifetime of the project or
have established) investment.
CA8. Coastal protection  Demonstrate climate risk reduction or resilience enhancement
reinforcement through through a qualitative study (in case of low or moderate risk to
construction solutions and the asset or activity) or a qualitative or quantitative
relocation of coastal assessment (in case of high risk to the asset or activity).
settlements, port  Consider all material hazards, and establish an adaptation
infrastructure, and routes plan to demonstrate that the measure or activity mitigates the

103
 compromised by coastal assessed climate risks over the lifetime of the project or
erosion or sea level rise, investment.
complemented by nature-
based solutions (e.g.,
mangrove reforestation)
CA9. Construction of wave  Demonstrate climate risk reduction or resilience enhancement
barriers, dikes, or through a qualitative study (in case of low or moderate risk to
floodgates that physical the asset or activity) or a qualitative or quantitative
risk assessments or other assessment (in case of high risk to the asset or activity).
technical studies have  Consider all material hazards, and establish an adaptation
shown to be resilient plan to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
CA10. Building of sea walls  Demonstrate climate risk reduction or resilience enhancement
on low-lying islands to through a qualitative study (in case of low or moderate risk to
stop coastal erosion the asset or activity) or a qualitative or quantitative
assessment (in case of high risk to the asset or activity).
 Consider all material hazards, and establish an adaptation
plan to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
CA11. Restoration and  Demonstrate climate risk reduction or resilience enhancement
reinforcement of through a qualitative study (in case of low or moderate risk to
infrastructure affected by the asset or activity) or a qualitative or quantitative
by catastrophes due to assessment (in case of high risk to the asset or activity).
extreme weather events  Consider all material hazards and establish an adaptation
plan to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
CA12. Development of  Demonstrate climate risk reduction or resilience enhancement
structures to reinforce or through a qualitative study (in case of low or moderate risk to
restore resilience of the asset or activity) or a qualitative or quantitative
buildings affected by assessment (in case of high risk to the asset or activity).
climate change events  Consider all material hazards, and establish an adaptation
plan to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.

DNSH requirements (applicable to all activities and measures)

Requirement Description
DNSH The substantial contribution to climate change adaptation must not
hinder the other environmental objectives of the taxonomy. If such
impacts are identified, a corresponding risk mitigation plan must be in
place.
Eligible activities and measures must comply with the local regulatory
framework and policies relevant to their activity and the territory in
which it is conducted and have an environmental management system
in place.

104
 Implementing entities of economic activities or measures or asset
owners must confirm the existence of a management system
commensurate with the size of the investment and the scale of the
project.

Mitigate or avoid The eligible activity or measure must not generate social harm. To this
adverse social end, it must adhere to the relevant local regulatory framework and
impacts policies and have a social management system in place.

Disaster Risk Management

To mitigate the effects of climate change, it is fundamental to prioritize investments in strengthening
emergency response systems and risk management services. Adaptation measures are crucial for
identifying opportunities to increase resilience and developing tailored responses to climate threats.
The WA4 activity, nature-based systems for prevention of and protection against drought or
flooding, is also aligned with this sector (Case 1). Refer to the criteria for this activity in the water
sector.
The activities and measures under Case 2 are shown below.

Adaptation investments for disaster risk management sector (Case 2)

DRA1. Emergency services, including Automatically eligible

 Disaster response coordination for
establishment and operation of assessment,
coordination, or preparedness facilities and
teams such as permanent emergency
response coordination centers and on-site
operations coordination centers in the
location of an emergency
 Emergency health services (emergency first
aid, medical care of patients in the field) in
temporary field hospitals, including military
hospitals and medical facilities that treat in-
and out-patients affected by an climate
emergency
 Disaster relief (ad-hoc on-location post-
disaster relief activities such as setting up
and managing evacuation centers in
coordination with existing structures, local
authorities and international organizations
until handover to local authorities or
humanitarian organizations)
 Search and rescue (e.g., searching for,
locating, and rescuing people who are in
distress or imminent danger; trapped by
flooding; located under debris; lost,

105
 stranded, or isolated with no means of
evacuation; missing and unaccounted for on
land and in water)
 Hazardous materials response (e.g.,
detection and isolation of hazardous
materials)
 Firefighting and fire prevention (e.g.,
administration and operation of regular and
auxiliary fire brigades)
 Technical protection response and
assistance to a climate hazard
DRA2. Design, construction, extension, For structural measures:
rehabilitation, upgrade, and operation of flood risk  Demonstrate climate risk
prevention and protection infrastructure by: reduction or resilience
Structural measures, including: enhancement through a
qualitative study (in case of low
 Dikes, river embankments or moderate risk to the asset or
 Sea defense dikes, storm-surge barriers, activity) or a qualitative or
seawalls, groynes and breakwaters quantitative assessment (in
 On- and off-line buffer basins for flood case of high risk to the asset or
detention and control in natural and artificial activity).
drainage networks  Consider all material hazards,
 Measures to control floods by increasing and establish an adaptation
retention capacity of catchment areas (e.g., plan to demonstrate that the
distributed buffer basins, sewer overflow measure or activity mitigates
structures) the assessed climate risks over
 Hydraulic structures to regulate water flow the lifetime of the project or
(e.g., pumping stations, sluices, gates) investment.
 Sediment control structures Non-structural measures are
 Elevated roads and bridges in flood-prone automatically eligible.
areas to ensure that communication between
affected areas remains intact for speedy
response, evacuation, and rehabilitation
Non-structural measures, including:
 Flood awareness–raising campaigns
 Flood modeling and forecasting, flood
hazard and risk mapping
 Spatial planning in flood-prone areas to
reduce flood risk (e.g., by applying
restrictions to land uses and enforcing
protection criteria through building codes)
 Flood early warning systems
DRA3. Mapping existing irrigation infrastructure, Automatically eligible
especially flood embankments, for effective flood
monitoring and management
DRA4. Hydrological modeling and flood-plain Automatically eligible
mapping and zoning of the Indus River system
using climate change scenarios to estimate
projected flood levels
DRA5. Development of capacity based on remote Automatically eligible
sensing for monitoring changes in glaciers and

106
 snow cover and in land cover in various agro-
ecological zones
DRA6. Investments to ensure that infrastructure,  Demonstrate climate risk reduction
including telecommunications, power, utilities, and or resilience enhancement through
transportation, are resilient in the face of climate a qualitative study (in case of low or
change impacts, particularly extreme weather moderate risk to the asset or
events activity) or a qualitative or
quantitative assessment (in case of
high risk to the asset or activity).
 Consider all material hazards, and
establish an adaptation plan to
demonstrate that the measure or
activity mitigates the assessed
climate risks over the lifetime of the
project or investment.
DRA7. Upgrade of public evacuation shelters and  Demonstrate climate risk reduction
provision of comprehensive awareness training to or resilience enhancement through
ensure their effective use a qualitative study (in case of low or
moderate risk to the asset or
activity) or a qualitative or
quantitative assessment (in case of
high risk to the asset or activity).
 Consider all material hazards, and
establish an adaptation plan to
demonstrate that the measure or
activity mitigates the assessed
climate risks over the lifetime of the
project or investment.
DRA8. Development of policies such as affordable  Demonstrate expected climate risk
crop insurance schemes for disaster-related losses reduction or resilience
enhancement of the policies.
 Consider all material hazards, and
establish an adaptation plan to
demonstrate that the measure or
activity mitigates the assessed
climate risks over the lifetime of the
project or investment.
DRA9. Emergency and natural disaster monitoring Automatically eligible
and response systems
DRA10. Development and deployment of early Automatically eligible
warning system for heat waves to reduce
associated illnesses and deaths

DNSH requirements (applicable to all activities and measures)

Requirement Description

107
 DNSH The substantial contribution to climate change adaptation must not hinder other
environmental objectives of the taxonomy. If such impacts are identified, a
corresponding risk mitigation plan must be in place.
Eligible activities and measures must comply with the local regulatory
framework and policies relevant to their activity and the territory in which it is
conducted and have an environmental management system in place.
Implementing entities of economic activities or measures or asset owners must
confirm the existence of a management system commensurate with the size of
the investment and the scale of the project.
Mitigate or The eligible activity or measure must not generate social harm. To this end, it
avoid adverse must adhere to the relevant local regulatory framework and policies and have a
social impacts social management system in place.

Manufacturing
To mitigate the effects of climate change, the manufacturing sector must be resilient to the impacts
of extreme weather events, especially in the availability of raw materials, energy, and water
resources. The activities and measures under the manufacturing sector for the objective of climate
change adaptation are shown below.
Adaptation investments for manufacturing sector (Case 2)

MA1. Sustainable  Demonstrate climate risk reduction or resilience enhancement

management of river through a qualitative study (in case of low or moderate risk to the
basins and protection asset or activity) or a qualitative or quantitative assessment (in
of aquifers (e.g., for case of high risk to the asset or activity).
water-intensive  Consider all material hazards, and establish an adaptation plan to
industries such as food demonstrate that the measure or activity mitigates the assessed
and beverage) climate risks over the lifetime of the project or investment.
MA2. Cold storage  Demonstrate climate risk reduction or resilience enhancement
infrastructure for through a qualitative study (in case of low or moderate risk to the
agricultural raw asset or activity) or a qualitative or quantitative assessment (in
materials to reduce case of high risk to the asset or activity).
waste in supply chains  Consider all material hazards, and establish an adaptation plan to
and planning in low- demonstrate that the measure or activity mitigates the assessed
productivity seasons climate risks over the lifetime of the project or investment.
MA3. Investments in  Demonstrate climate risk reduction or resilience enhancement
industrial infrastructure through a qualitative study (in case of low or moderate risk to the
resilient to floods or asset or activity) or a qualitative or quantitative assessment (in
extreme weather case of high risk to the asset or activity).
events  Consider all material hazards, and establish an adaptation plan to
demonstrate that the measure or activity mitigates the assessed
climate risks over the lifetime of the project or investment.
MA4. Development and Automatically eligible
implementation of
sustainable production
plans that are
respectful of adjacent
vulnerable
communities

108
 MA5. On-site renewable The activity must meet the criteria established under the energy
energy production and sector for the mitigation objective and the following criteria.
reduction of grid
 Demonstrate climate risk reduction or resilience enhancement
dependence
through a qualitative study (in case of low or moderate risk to the
asset or activity) or a qualitative or quantitative assessment (in
case of high risk to the asset or activity).
 Consider all material hazards, and establish an adaptation plan to
demonstrate that the measure or activity mitigates the assessed
climate risks over the lifetime of the project or investment.
MA6. Production and  Demonstrate climate risk reduction or resilience enhancement
supply of materials and through a qualitative study (in case of low or moderate risk to the
equipment needed for asset or activity) or a qualitative or quantitative assessment (in
disaster relief. case of high risk to the asset or activity).
 Consider all material hazards, and establish an adaptation plan to
demonstrate that the measure or activity mitigates the assessed
climate risks over the lifetime of the project or investment.
MA7. Implementation of  Procurement policies must include the criteria and requirements
sustainable established for the activities covered in the taxonomy for
procurement practices suppliers.
and services to  Demonstrate climate risk reduction or resilience enhancement
increase supply chain through a qualitative study (in case of low or moderate risk to the
efficiency asset or activity) or a qualitative or quantitative assessment (in
case of high risk to the asset or activity).
 Consider all material hazards, and establish an adaptation plan to
demonstrate that the measure or activity mitigates the assessed
climate risks over the lifetime of the project or investment.

DNSH requirements (applicable to all activities and measures)

Requirement Description
DNSH The substantial contribution to climate change adaptation must not
hinder other environmental objectives of the taxonomy. If such impacts
are identified, a corresponding risk mitigation plan must be in place.
Eligible activities and measures must comply with the local regulatory
framework and policies relevant to their activity and the territory in
which it is conducted and have an environmental management system
in place.
Implementing entities of economic activities or measures or asset
owners must confirm the existence of a management system
commensurate with the size of the investment and the scale of the
project
Mitigate or avoid The eligible activity or measure must not generate social harm. To this
adverse social end, it must adhere to the relevant local regulatory framework and
impacts policies and have a social management system in place.

109
Energy
To mitigate the effects of climate change, the sector must be resilient to the impacts of extreme
weather events and adapt accordingly.
Adaptation investments for energy sector (CASE 2)

EA1. Underground wiring  Demonstrate climate risk reduction or resilience enhancement

for electricity through a qualitative study (in case of low or moderate risk to
transmission and the asset or activity) or a qualitative or quantitative assessment
distribution systems in (in case of high risk to the asset or activity).
areas vulnerable to  Consider all material hazards, and establish an adaptation plan
storms to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
EA2. Water management  Demonstrate climate risk reduction or resilience enhancement
and storage for through a qualitative study (in case of low or moderate risk to
hydroelectric plants the asset or activity) or a qualitative or quantitative assessment
(in case of high risk to the asset or activity).
 Consider all material hazards, and establish an adaptation plan
to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
EA3. Investments in  Demonstrate climate risk reduction or resilience enhancement
increasing resilience of through a qualitative study (in case of low or moderate risk to
energy systems (e.g., the asset or activity) or a qualitative or quantitative assessment
hydroelectric) against (in case of high risk to the asset or activity).
climate change effects  Consider all material hazards, and establish an adaptation plan
(e.g., drought) to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
EA4. Flood protection for  Demonstrate climate risk reduction or resilience enhancement
utility systems through a qualitative study (in case of low or moderate risk to
the asset or activity) or a qualitative or quantitative assessment
(in case of high risk to the asset or activity).
 Consider all material hazards, and establish an adaptation plan
to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
EA5. Energy demand Automatically eligible
management systems
(rising temperatures and
hot summers could
increase energy demand)
EA6. Energy storage Automatically eligible
systems

DNSH requirements (applicable to all activities and measures)

Requirement Description

110
 DNSH The substantial contribution to climate change adaptation must not
hinder other environmental objectives of the taxonomy. If such impacts
are identified, a corresponding risk mitigation plan must be in place.
Eligible activities and measures must comply with the local regulatory
framework and policies relevant to their activity and the territory in
which it is conducted and have an environmental management system
in place.
Implementing entities of economic activities or measures or asset
owners must confirm the existence of a management system
commensurate with the size of the investment and the scale of the
project
Mitigate or avoid The eligible activity or measure must not generate social harm. To this
adverse social end, it must adhere to the relevant local regulatory framework and
impacts policies and have a social management system in place.

Waste
To limit the effects of climate change, the waste sector must minimize public health risks derived
from these effects on waste collection and management. The activities and measures covered
under this sector for the objective of climate change adaptation are shown below:

Adaptation investments for waste sector (Case 2)

WSA1. Flood prevention  Demonstrate climate risk reduction or resilience enhancement

measures in waste through a qualitative study (in case of low or moderate risk to
management plants the asset or activity) or a qualitative or quantitative assessment
(in case of high risk to the asset or activity).
 Consider all material hazards, and establish an adaptation plan
to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
WSA2. Investments in  Demonstrate climate risk reduction or resilience enhancement
fire and landslide through a qualitative study (in case of low or moderate risk to
reduction and control the asset or activity) or a qualitative or quantitative assessment
due to increased (in case of high risk to the asset or activity).
temperature or rainfall  Consider all material hazards, and establish an adaptation plan
to demonstrate that the measure or activity mitigates the
assessed climate risks over the lifetime of the project or
investment.
WSA3. Investments to  Demonstrate and quantify the expected impacts during the
reduce amount of plastic project life span.
waste entering the  Establish risk mitigation plan.
marine environment
WAS3. Implementation of Automatically eligible
early warning and
leakage detection
systems (e.g., methane
leaks in biogas plants)

111
 WSA4. Investments that Automatically eligible, although for activity related to production of
promote use of organic compost, apply corresponding criteria in the waste sector under the
waste to replace mitigation objective.
synthetic fertilizer with
organic fertilizer
WSA5. Use of waste for Automatically eligible
biogas production to
replace firewood in rural
households, considering
minimization of methane
leaks in design and
operation

DNSH requirements (applicable to all activities and measures)

Requirement Description
DNSH The substantial contribution to climate change adaptation must not
hamper other environmental objectives of the taxonomy. If such
impacts are identified, a corresponding risk mitigation plan must be in
place.
Eligible activities and measures must comply with the local regulatory
framework and policies relevant to their activity and the territory in
which it is conducted and have an environmental management system
in place.
Implementing entities of economic activities or measures or asset
owners must confirm the existence of a management system
commensurate with the size of the investment and the scale of the
project
Mitigate or avoid The eligible activity or measure must not generate social harm. To this
adverse social end, it must adhere to the relevant local regulatory framework and
impacts policies and have a social management system in place.

Case 3: Other economic activities and assets across all sectors to determine their substantial
contribution to the climate change adaptation objective
It is proposed that Pakistan’s Green Taxonomy include transversal substantial contribution criteria
to identify other adapted activities and activities that enable adaptation for all sectors, based on
investments, such as:
- Adapted activities that demonstrate reduction of material physical climate risks and
support systemic adaptation without hampering adaptation efforts of other people,
nature, and assets
- Activities that enable adaptation reducing material physical climate risk in other
economic activities or address systemic barriers to adaptation
To be eligible, economic activities and assets under Case 3 must comply with all the general
substantial contribution criteria outlined below.

General substantial contribution criteria for adapted economic activities

Criteria Sub-criteria

112
1. Reduction of physical and 1.1. The economic activity includes physical and non-physical
material climate risks of measures designed to reduce, as much as possible and based
economic activities and assets on best effort, all physical climatic risks material to that activity
that have been identified through a risk assessment.
Economic activity must conduct
assessment of physical and The criteria for risk assessment can be qualitative or
material climate risks quantitative, depending on level of risk. For low-risk projects
associated with economic (qualitative technical analysis), criticality or vulnerability must
activity. If the assessment be identified and actions to mitigate risks developed. For
reveals a substantial impact of moderate-risk projects (qualitative technical analysis), criticality
climate change on the activity, a or vulnerability must be identified and an action narrative
detailed adaptation plan should developed with stakeholder consultation to develop actions to
be developed to address how to mitigate risks. For high-risk projects (qualitative and
manage the identified climate quantitative), qualitative and quantitative criteria should be
risks. The plan should be applied, such as identifying criticality or vulnerability;
flexible to adapt to potential developing a narrative with stakeholder consultation; and
changes. quantifying risks to develop actions that mitigate risks.
1.2. The high-risk assessment should have the following
characteristics.
 It considers current weather variability and future
climate change projections and scenarios, including
uncertainty.
 It is based on a robust analysis of available climate
data and information on various future climate
scenarios.
 It is consistent with the expected duration of the
economic activity or the useful life of the asset.
o For activities and assets with an expected
duration or useful life of less than 10 years, the
assessment is made using updated climate
projections at the smallest appropriate scale (5
years).
o For all other activities, the assessment is made
using the most-advanced, highest-resolution
climate projections available in the country that
are consistent with the expected duration or
useful life of the activity or asset, including at
least 10 to 30 years for large investments.
o Future scenarios include the shared
socioeconomic trajectories SSP5 and SSP2
and the concentration trajectory RCP8.5
representative of the Intergovernmental Panel
on Climate Change.
 It considers potential unintended consequences or side
effects.
1.3. If the risk assessment reveals that climate change
significantly affects the activity or asset, a corresponding
adaptation plan should be defined indicating how the identified
climate risks will be managed.
2. Support for adaptation of the 2.1. Economic activity and adaptation measures do not
system hamper adaptation efforts or the level of resilience to other
people's physical climate risks, nature, cultural heritage,

113
 Economic activity and assets, and other economic activities or the objectives of
adaptation measures support Pakistan’s NDC.
systemic adaptation15 and do
not hamper adaptation and 2.2. Economic activity and adaptation measures are consistent
disaster risk reduction efforts of with local, sectoral, regional, or national adaptation strategies
other people, nature, and and plans. If possible, nature-based solutions16 (see criteria
assets. under water sector WA4), which provide environmental, social
and economic benefits and help build resilience, should be
used.

General substantial contribution criteria for economic activities enabling adaptation

Criteria Sub-criteria
1. Contribution to adaptation of other 1.1. Economic activity facilitates adaptation to or
economic activities reduces physical climate risks beyond the limits of the
activity itself. The activity should demonstrate how it
Economic activity reduces material
supports adaptation through:
physical climate risk in other economic
activities or addresses systemic barriers  A risk assessment
to adaptation. Activities that enable - Conduct a robust assessment of current and
adaptation include activities that: future climate risks, including the uncertainty
associated with climate change.
 Promote an existing technology,
- Use reliable climate data and projections to
product, practice, governance
identify the risks that economic activity will
process, or innovative use of
help address.
existing technologies, products,
or practices (including those - Review other territorial risks that influence the
related to natural infrastructure) activity.
 Remove barriers to information,  An assessment of the effectiveness of the
finance, technology, impact contribution of economic activity to the
reduction of these risks, considering the scale
of exposure and vulnerability to them

15
Understood as development of the resilience of a broader system, such as a community, population, ecosystem, city, territory, or other
asset.
16
Nature-based solutions are actions to sustainably protect, manage, and restore natural or modified ecosystems that address societal
challenges effectively and adaptively, simultaneously providing benefits for human well-being and biodiversity (IUCN 2016).

114
 awareness, education, and ability 1.2. If the activity involves infrastructure that allows
of others to adapt for adaptation, ensure that it meets selection criteria
of adapted activities.
The activity ensures that infrastructure is resilient and
can help other economic activities adapt to climate
risks.
2. Cross-cutting criterion that applies to Establish measurement indicators
adapted economic activities that enable
 Define clear and measurable indicators to
adaptation
assess the reduction of physical climate risks
 Monitoring results of adaptation and adaptation outcomes.
 Reduction of physical climate  Ensure that these indicators are relevant and
risks must be measurable. reflect the actual impact of the activity on
adaptation.
Continuous monitoring
 Implement a continuous monitoring system to
measure and evaluate the results of
adaptation over time.
 Conduct up-to-date climate risk assessments
with appropriate frequency, considering
evolving risks and new circumstances.
Transparent communication
 The activity transparently communicates the
results of the adaptation achieved.
 The activity rovides clear information on how
efforts are contributing to climate risk
reduction and successful adaptation of other
economic activities.

DNSH requirements
Requirement Description
DNSH The substantial contribution to climate change adaptation must not hinder other
environmental objectives of the taxonomy. If such impacts are identified, a
corresponding risk mitigation plan must be in place.
Eligible activities and measures must comply with the local regulatory framework
and policies relevant to their activity and the territory in which it is conducted and
have an environmental management system in place.
Implementing entities of economic activities or measures or asset owners must
confirm the existence of a management system commensurate with the size of
the investment and the scale of the project

Mitigate or The eligible activity or measure must not generate social harm. To this end, it
avoid must adhere to the relevant local regulatory framework and policies and have a
adverse social management system in place.
social
impacts

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Sectors and Activities that Contribute
Substantially to Multiple Environmental Objectives
The agricultural, forestry, and fishing (including livestock) sectors are extremely important to
Pakistan because of their contributions to GDP and GHG emissions, as well as the direct impact
that the expected increase in the frequency of extreme weather events and changes in precipitation
and temperature patterns will have on these sectors, specifically on the quality and volume of
production and consequently the potential impact on the country's food security. This section
addresses the seven crosscutting environmental objectives for the agricultural (including livestock),
forestry, and fishing sectors. A list of sustainable practices that contribute to multiple environmental
and climate objectives, including climate change mitigation and adaptation, sustainable use and
protection of water resources, protection of healthy ecosystems, and biodiversity.
For these sectors, green practices are classified into three levels of complexity (basic, intermediate,
advanced), which ensures a gradual transformation process and transition of the farm.
• Basic practices are interventions that are relatively low cost and low complexity that
generate benefits by enabling more-efficient use of resources and contribute to
environmental preservation with respect to the traditional extensive model.
• Intermediate practices are more complex than the basic ones, involving greater technical
investment.
• Advanced practices fundamentally modify the production model, integrating techniques,
knowledge, and inputs that improve production and environmental efficiency.

Agriculture (Including Livestock), Forestry, and Fishing

Agriculture (including livestock), forestry, and fishing accounts for 25 percent of GDP because most
of the population depends directly or indirectly on this sector. The sector also employs
approximately half of the country's employed labor force [48]

Agriculture (Crops) and Livestock

Livestock accounted for 58 percent of the agricultural sector's GDP and 14 percent of national GDP
in 2023 [48]. Livestock is a driver of rural development, generating income and employment, but
livestock production systems are the primary source of methane emissions because of enteric
fermentation in digestive systems and manure management practices.
Crops accounted for 39 percent of the sector's GDP and 10 percent of national GDP in 2023 [48].
Managed soils (all soils, including those used for forestry, cultivation, and pasture) are a source of
direct and indirect GHG emissions, primarily nitrous oxide, which is naturally produced through
various sources associated with the nitrogen cycle and through the addition of inorganic nitrogen to
the soil. Direct nitrous oxide emissions account for 61 percent of total emissions from managed soils
in Pakistan, followed by indirect nitrous oxide emissions (33 percent) and emissions from urea
application (6 percent) [39].
Climate variability greatly harms the sector in the short term and is likely to harm it further in the
long term. This sector is identified in different climate strategies of the country not only as one of the
most important sectors in terms of emission reduction potential, but also as the sector in which
urgent action is required to combat the effects of climate change to ensure food security [49].
The following is a non-exhaustive list of the most important agricultural and livestock production
regulations in Pakistan.

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Table 2. Key Important Agricultural and Livestock Production Regulations on the Pakistan
Market

• Khyber Pakhtunkhwa Agricultural and Livestock Produce Markets Act, 2007

• New Agri; Marketing Policy and Marketing Act, 2015
• Punjab Agricultural Marketing Regulatory Authority Act, 2018
• Legal Framework of Punjab Agriculture Department
• Agricultural Produce (Grading and Marketing) Act, 1937
• Corporate Agriculture Farming Policy
• Companies Act, 2017
• Pakistan Mercantile Exchange Agricultural Policies
• Electronic Warehouse Receipt Financing
• Pakistan Animal Science Council Bill, 2022
• Sindh Government Rules of Business, 1986
• Sindh Consumer Protection Act, 2015
• Godown Registration Act, 1996
• Weights and Measures Act
• Price Act, 2005
• Pakistan Cotton Cess Act
The activities included in this sector are:
Activity ISIC/PSIC Code
A1. Perennial and non-perennial crops ISIC/PSIC codes A011 and A012

A2. Animal production ISIC/PSIC code A014

The eligibility criteria for these activities are as follows:

Sector Agriculture
Activity A1. Perennial and non-perennial crops
ISIC/PSIC A011, A012
Description Green, Amber and Ineligible practices dedicated to the production of perennial
and non-perennial crops. The eligibility of green investments in this sector shall
be based on the transition to climate-smart and regenerative agricultural
practices,17 which also affect ecosystem restoration and integrated management
of the productive landscape to respond to the challenges of food security,low-
carbon and climate change resilient production.
Practices in production of perennial and non-perennial crops should focus on:

17
Regenerative agriculture and climate-smart agriculture are farming approaches designed to increase environmental sustainability and
resilience to climate change that differ in their focus and the specific practices they promote. Regenerative agriculture focuses on
regenerating ecosystems, particularly soil, and promoting biodiversity, whereas climate-smart agriculture has a broader focus, with three
main goals: increasing agricultural productivity and incomes, adapting to climate change, and reducing GHG emissions [33]. The taxonomy
should facilitate both approaches because they complement each other, with regenerative agriculture focusing on ecosystem restoration
and climate-smart agriculture focusing on climate resilience and adaptation strategies.

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 - Protection and rational and efficient management of water resources
- Conservation and rational use and recovery of soils
- Conservation of forests, biodiversity, and other natural ecosystems
- Restoration and ecological regeneration of degraded and degrading lands
and agro-landscapes
- Adaptation of production systems to climate variability and to the
principles of sustainability, regenerative agriculture, environmental
conservation, and reduction of emissions and pollution, considering
profitability factors
- Crop diversification, rotation, and association
Objectives Climate change mitigation, adaptation, and resilience; sustainable use and
protection of water resources; protection of healthy ecosystems and biodiversity;
pollution prevention and control; promotion of circular economy; sustainable land
management
Methodology Practice-based approach
Green Basic practices (non-exhaustive list):
Crop rotation (in transitional or short-cycle crops): Seeds, seedlings,
equipment, local labor management, and technical assistance to facilitate crop
rotation
Fertilizer management and efficient irrigation systems: Equipment, tools,
installations, and raw materials to produce biofertilizers; efficient irrigation
systems such as responsive drip irrigation, with fertilization systems integrated
into the irrigation water (fertigation); equipment, tools, and materials for fertilizer
application that allow timely, efficient, effective dosing (when the crop requires it,
in the necessary quantity, with the specified quality), including replacement
synthetic fertilizers prepared from organic material
Pest and disease control: Supplies for biological and physical control of pests
and diseases (e.g., repellent plant seeds, traps, or nets). If use of agrochemicals
is required, only pesticides and fertilizers registered and permitted in the country
must be used. Capacity building for application of pest- and disease-monitoring
techniques and research, development, and dissemination of mechanical and
biological control methods to keep pest populations under control are eligible.
Soil conservation: Seeds, biofertilizers, compost, and light equipment for soil
protection; equipment, materials, tools, and local labor for establishment and
management of soil conservation practices; terrace construction on sloping soils
or deep-rooting mulching (living mulch); capacity building for application of
techniques and establishment of soil conservation and erosion control; and
minimum tillage of the soil and maintenance of biomass coverage of the soil in at
least 80 percent of the property are eligible.
Water management: Technologies for improvement of irrigation, storage,
drainage systems, and water remediation and treatment systems; installation of
efficient water management systems (rainwater harvesting systems, water
rationing and water recycling); and establishment of individual and community-
based pumping systems associated with small-scale irrigation systems with solar
energy powered with water-saving technology such as drip irrigation. High-
efficiency irrigation systems are eligible.
Awareness raising related to open burning of crop residue: Training and
technical assistance programs related to impacts of open burning and promotion
of long-term cultivation

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Shift from transient crops or pasture to agroforestry systems: Seeds,
seedlings, material for nursery development, and other inputs (equipment and
local labor) to shift land use toward systems with greater carbon sequestration
and better soil protection
Intermediate practices (non-exhaustive list)
Waste management and treatment of water contaminated with organic
waste: Equipment, tools, inputs, and local labor for establishment and operation
of systems for treatment and final disposal of agricultural waste and wastewater;
collection, treatment, and disposal of empty pesticide containers; installation of
agricultural wastewater monitoring and treatment systems to remove physical,
chemical and biological contaminants before final disposal
Alternative crop residue management practices to mitigate environmental and
economic impacts of open burning of agricultural residues (e.g., conversion of
crop residues into fertilizers, biochar products and biomass pelletizers made from
rice husks, wheat, cotton, and other agricultural waste)
Organic or green manure (use of mulching): Equipment, material, tools, and
inputs (e.g., compost bins, seedlings, local labor, vermicompost, biozote
production from composting of organic waste for use as fertilizer). Resulting
organic fertilizers must comply with the National Bio-Safety Guidelines, the
Organic Fertilizer Standards issued by the Pakistan Standards and Quality
Control Authority, and applicable provincial fertilizer acts (e.g., Punjab Fertilizer
Act, Sindh Fertilizer Ordinance).
Advanced practices (non-exhaustive list)
Use of sustainable production certifications or labels: Certified agricultural
productions: Sustainable Rice Platform (for growing rice with sustainable
certification), Better Cotton Initiative, Global Organic Textile, World Wildlife Fund
(for growing cotton with certification), Palm Oil Innovation Group, Rainforest
Alliance, Global Good Agricultural Practices, Climate Friendly Rice Certification,
Smartcane Best Management Practice program, Roundtable on Sustainable
Biomaterials Standard, Sustainable Rice Platform, International Federation of
Organic Agriculture Movements certification, GLOBAL G.A.P. Number GNN
certified farming, Proterra Foundation, Bonsucro (sugar)
Alternate wetting and drying techniques for saving water in rice production:
Equipment, tools and materials for implementation of alternate wetting and drying
planting systems. The techniques must increase water efficiency by at least 30
percent over traditional permanent water ponding flooded without affecting crop
yield.
Introduction of polycultures or intercropping of permanent crops: Seeds,
seedlings, materials, inputs, tools and equipment, local labor, and technical
assistance to incorporate the polyculture system or crops associated with
compatible species (preferably native timber or fruit trees)
Biotechnology in agricultural production chains: Reproductive material,
including in vitro plants, inputs, equipment, tools, local labor, and technical
assistance to improve seeds and newly developed germplasm to increase yields
and resilience to climate variability (these already exist for rice, maize, beans,
and cassava); research, development, and dissemination of climate-resilient
seeds and crops; and capacity building, technical assistance, equipment,
facilities, tools, materials, inputs, and local labor for processing residual
agricultural biomass in the production of bioinputs for different uses

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 Adoption and maintenance of monitoring and tracking technology: . This
includes adoption of monitoring and tracking technology to detect or locate areas
of crop burning, increasing predictability and precision in agricultural operations.
Agricultural equipment powered by renewable energy: Improvement in solar
energy use in irrigation to combat drought; solar pumping systems based on
renewable energy such as solar or wind, not hybrid with diesel, and used only for
shallow aquifers; istallation of renewable energy systems and procurement of
biogas- and electricity-based agricultural machinery such as biodigesters and
renewable energy equipment; includes installation and technical and managerial
advice
Additional eligible Green practices
 Upgrade of Indus Basin Irrigation System rehabilitation programs to
modernize surface water distribution systems
 Rural advisory services for project beneficiaries
 Investments in income diversification to reduce sensitivity of rural
communities as a complement to agricultural livelihoods
 Affordable insurance products to increase climate resilience of agricultural
 Construction and maintenance of flood and coastal erosion management
measures for existing agricultural facilities
 Weather monitoring and forecasting systems (e.g., early warning
systems, including wildfire control measures to reduce damage from
wildfires induced by heatwaves)
 Policy and technological research and professional services to increase
resilience in the agricultural sector
It may be beneficial to use the data portal and studies developed to identify the
agro-ecological zones of Pakistan, which provide information on crops that
should be grown based on climate and water availability. Agro-ecological zones
of Pakistan | GAEZ v4 Data Portal.
Amber Eligible transition practices
(transition)
Until 2030, nutrient management plans based solely on chemical fertilizers for
soil-based cultivation are eligible if there is a plan to shift to an integrated
approach wherein nitrous oxide emissions from nitrogen in the consumption of
synthetic nitrogen fertilizers is reduced.
Until 2030, phytosanitary management plans based solely on chemicals are
eligible if there is a plan to shift to an integrated approach wherein biological and
physical control of pests and diseases are prioritized.
Ineligible Below are the activities that would not be eligible under the taxonomy:
Use of chemicals listed in the Updated National Implementation Plan for Phasing
Out and Elimination of Persistent Organic Pollutants from Pakistan Under
Stockholm Convention Article 7 (A)
Operations on land that has been defined as being of high conservation value,
primary forest, or a protected or high-carbon stock area
Activities that indicate change of land use (e.g., from forestry to livestock or
agricultural land, from livestock to agricultural land)
Land that is not intended for agriculture and is best used for another activity

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 Activities involving deliberate open burning of crop residues, which is a major
contributing factor to local and transboundary haze and air pollution. Penalties for
this activity may be applied based on the country's regulations.

DNSH Requirements
 All investments related to agricultural projects must comply with the country's regulations
regarding land use and environmental protection. Important points to monitor include (applies
to producers of all sizes):
- Location of the activity in relation to protected natural areas
- Compliance of the activity with regulations related to protected areas or zones of
ecological importance in the country and environmental permits necessary for execution
of the activity
- Congruence of productive activities with applicable Urban Planning strategies at the
national, provincial, and local levels
- Verify Error! Reference source not found..
 Environmental management plan
In addition to complying with applicable regulations, developers of projects that may required
green or transition investment will be able to reveal, through an environmental management plan,
possible environmental impacts of the activity and preventive measures that can be taken to
avoid significantly damaging natural resources, as well as highlighting the measures to enhance
environmental benefits for the property where the activity to be financed will conducted. This plan
will depend on the scale of the project and will apply mainly to medium and large producers.
Implementation of these practices should be frequently monitored.
Annex 3 presents a voluntary scheme for the design of this type of environmental management
plan, as well as some measures for prevention of damage and environmental benefit that can
serve as a guide for preparation of these plans (applies to medium and large producers).

Sector Agriculture
Activity A2. Animal production
ISIC/PSIC A014
Description Green, Amber and Ineligible operations dedicated to animal production. The
eligibility of green investments in this sector shall be based on the transition to
climate-smart agriculture, with good management of water and soil and local
biodiversity synergistically managed.
The practices proposed under this activity should have a positive impact on:
- Protection and management of water resources
- Soil conservation and recovery
- Local biological diversity to produce high-quality livestock feed
- Conservation of forests and other natural ecosystems
- Ecological restoration of degraded lands and agro landscapes
The main animals produced in Pakistan are buffalo, cattle, sheep, and goat [57]
Objective Climate change mitigation; Climate change adaptation, and resilience;
sustainable use and protection of water resources; protection of healthy
ecosystems and biodiversity; pollution prevention and control; promotion of
circular economy; sustainable land management
Methodology Practice-based approach

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Green Basic practices (non-exhaustive list):
Paddock division and rotation: Electric fences, fence posts (preferably live
wood or recycled material) not derived from natural forests to separate grazing
areas in a defined pattern adapted to the size of the farm to maintain the
regenerative capacity of the pastures
Efficient management and protection of water sources: Drinking troughs,
hoses, floats, buoys, pumps, storage tanks, and piping to collect, store, and
conserve water to provide livestock with clean, reliable water during seasonal
and climatic variations. Harvest water and build livestock aqueducts. Projects
related to protection of natural water sources, preventing direct access by
livestock (e.g., by isolating riparian forest areas, planting native species for
stream restoration)
Crop residue use in livestock feeding projects
Physical protection of soil and increase in aboveground and groundwater
biomass: Livestock agroforestry technologies through installation of windbreaks,
protection belts, living fences, or single- or multi-layer hedges with multipurpose
forest or fruit species; rows with local trees
Capacity building on sustainable livestock models: Reinforcement of
capacity-building programs on sustainable livestock models; promotion of
technological development agreements with private sector and human capital
formation
Intermediate practices (non-exhaustive list)
Livestock health improvement: Medical programs, medicine, veterinary
services, pasture-based protein banks or forage trees, harmless treatment
systems for sick and dead livestock and poultry, construction of elevated beds
Reducing methanogens and improving animal diet: Carbohydrates, dietary
supplements, immunization materials, and technical expertise to reduce
methanogens and other microbes involved in methanogenesis (e.g.,
incorporating 3-nitrooxypropanol into the animal diet to reduce emission of
methane)
Pasture and fodder management: Purchase and sowing of seeds of improved
or natural varieties of grasses and native creeping legumes, selected according
to soil and climatic conditions in the region; network of nurseries (including on-
site nurseries) of native or focal tree material for protection; equipment for
planting trees and shrubs that provide fruits and leaves for livestock, accelerating
soil recovery and favoring the wildlife population
Diversification of productive activities: Livestock agroforestry technologies
such as grazing in perennial crop plantations or forest plantations; family gardens
with backyard livestock
Advanced practices (non-exhaustive list):
Intensive silvopastoral systems (SSPI): Purchase and stocking of species
tested in various regions and conditions in Pakistan; adaptation of paddocks,
shade, drinking fountains, and related inputs; fodder banks, mixed fodder banks,
and fodder hedgerows, allowing for greater variety of species, high protein
benefits, nutrient recycling, soil moisture retention, and biodiversity
Organic and green manure, manure and effluent use: Good management of
manure, urine, and other organic residue using equipment, materials, tools, and
inputs (e.g., composting, seedlings, seeds, local labor, vermicomposting); biochar

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 production and biodigesters for organic waste management; construction of
facilities for storage, treatment, and use of livestock and poultry waste
Improved breeds: Research, development, and dissemination of livestock
breeds to increase productivity and resilience and reduce GHGs (resistant to
heat and water stress), including conventional breeding and biotechnology;
eligible inputs: local breeds, conventional breeding (crossbreeding) giving
preference to local breeds, biotechnological tools (review and consider Biosafety
Guidelines of the government of Pakistan)
Use of sustainable livestock production certifications or labels: Certified
livestock productions: Global Roundtable for Sustainable Beef, Sustainable
Poultry Network(SPN – USA), PoultryCARE
Monitoring and treatment services to prevent, monitor, and treat climate-related
pathogens and diseases in ruminant livestock, poultry, and swine
Construction of physical structures and installation of equipment to protect
livestock against heat stress
Amber Until 2030, nutrient management plans (grazing crops) based solely on chemical
(transition) fertilizers for soil-based cultivation are eligible if there is a plan to shift to an
integrated approach wherein nitrous oxide emissions from nitrogen in
consumption of synthetic nitrogen fertilizers is reduced.
Until 2030, phytosanitary management plans (grazing crops) based solely on
chemicals are eligible if there is a plan to shift to integrated approach where
biological and physical control of pests and diseases is prioritized.
Ineligible Use of feed related to ineligible operations under perennial and non-perennial
crop activity.
Operations on continuous wooded areas: Land of more than 1 hectare with trees
more than 5 m high and a canopy cover of more than 30 percent or trees capable
of reaching these thresholds in situ
Operations on wetlands: Land covered or saturated with water permanently or for
a significant part of the year (e.g., mangroves, floodplains)
Activities that indicate change of land use (e.g., from forestry to livestock or
agricultural land, livestock to agricultural land)
Land that is not intended for livestock farming and whose best use is for forestry
(e.g., by slope)

DNSH Requirements
 All investments related to agricultural projects must comply with the country's regulations
regarding land use and environmental protection. Important points to monitor include (applies
to small, medium and large producers):
- Location of activity in relation to protected natural areas
- Compliance of activity with regulations related to protected areas or zones of
ecological importance in the country and environmental permits necessary for
execution of the economic activity
- Congruence of productive activities with applicable urban planning strategies at the
national, provincial, and local levels
- Verify Error! Reference source not found.
 Environmental management plan
In addition to complying with applicable regulations, developers of projects that may required
green or transition investment will be able to reveal, through an environmental management plan,

123
 possible environmental impacts of the activity and preventive measures that can be taken to
avoid doing significant damage to natural resources, as well as highlight the measures to
enhance the environmental benefits on the property where the activity to be financed will be
conducted. This plan will depend on the scale of the project and will apply mainly to medium and
large producers. Implementation of these practices should be frequently monitored.
Annex 3 presents a voluntary scheme for the design of this type of environmental management
plan, as well as some measures for prevention of damage and environmental benefit that can
serve as a guide for preparation of these plans (applies to medium and large producers).

Forestry
The forestry sector has the potential to provide environmental services that are extremely important
in the fight against climate change. It can also play an important role in the local economy through
sustainable and regenerative systems. Forests not only sequester and mitigate GHG emissions, but
also protect biodiversity. Afforestation, reforestation, and forest management to maximize carbon
sequestration are key strategies for climate change mitigation in line with a 1.5°C pathway.
Climate change mitigation in the forestry sector is also strongly linked to avoiding deforestation and
land-use change. Reducing or preventing deforestation is the mitigation option with the largest,
most immediate carbon stock impact in the short term [58].
The eligibility of green investments in this sector is based on management and conservation of
natural forests and sustainable use of forest plantations for commercial purposes. In this context,
the actions proposed in this sector should help:
 Protect and manage water resources
 Conserve and recover soil
 Conserve forests and other natural ecosystems
 Ecologically restore degraded lands and agro landscapes
 Increase biomass by fixing CO2
The following is a non-exhaustive list of regulations associated with national forest restoration plans.

Table 3. Regulations Associated with National Forest Restoration Plans

 National Forest Policy, 2015

 National Climate Change Policy, 2012
 Draft National Action Plan for Forest and Landscape Restoration in Pakistan
 National Forest Monitoring System in Accordance with the United Nations Framework
Convention on Climate Change Guidelines

Activities in the forestry sector have been mapped and grouped as follows.
Activity ISIC/PSIC Code
F1. Sustainable forest management ISIC code: A0200,/PSIC code: A0210
F2. Forestry plantation ISIC code: A0200/PSIC code: A0210
F3. Conservation, restoration, and maintenance of ISIC code: A0200/PSIC code:, A0210
natural, pristine forests

The eligibility criteria for the selected activities are as follows.:

Sector Forestry

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Activity F.1 Sustainable forest management
ISIC/PSIC A0200, A0210
Description Green, Amber, and Ineligible assets, projects and related to sustainable forest
management. Including Practices to reduce deforestation, natural forest
degradation. Technological development, technical assistance, and basic
infrastructure is also included.
Objective Climate change mitigation; Climate change adaptation, and resilience;
sustainable use and protection of water resources; protection of healthy
ecosystems and biodiversity; pollution prevention and control; promotion of
circular economy; sustainable land management
Methodology Practice-based approach
Green Basic practices (non-exhaustive list):
Nurseries required for adoption of integrated farm management (IFM)
practices: Infrastructure, services, and materials needed to operate nurseries,
including water, energy, and organic fertilizers and biofertilizers for biocontrol;
high-quality seeds and plants to guarantee sustainability of managed forests
Monitoring systems: Adoption and maintenance of monitoring technology that
enables the tracking of the forest extracts and forest conservation status;
software, hardware, analysis services, and communication equipment
Conservation and maintenance of forests: Control and risk reduction,
reinforcements for rangers and forestry officials or similar schemes, support for
forestry community and regional forest protection
Forest management and control: Support of community forestry and regional
projects related to forest protection and management, implementation of plans to
monitor physical and functional condition of forests at a scale that allows for local
action, control systems to protect forest integrity
Support of national programs designed to conserve existing forests and
increase the area under forest cover: Technical and financial support to
national programs established in the NDC (e.g., Billion Trees Afforestation
Project (BTAP), Ten Billion Tree Tsunami Programme, and others that
demonstrate an increase in forest cover, improvement of the interconnected
areas, and the presence of native species)
Intermediate practices (non-exhaustive list)
Ecosystem services: Activities for technical support and diffusion that increase
carbon stocks or reduce the impact of forestry activities through associated
management and information systems and other technologies; support for
formation and strengthening of community-based organizations that support
integration and sustainable use of ecosystem goods and services
Land acquisition and refinancing if sustainable forest management practices
are being conducted or being implemented as certified by credible national
programs or international schemes
Forest management norms: Improvement of the regulatory framework and
forest governance to strengthen the environment, developing studies,
consultancies, and training
Shelter belt technology: Establishment of windbreaks with suitable tree species
to protect forests and farmland from erosion and extreme weather

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 Advanced practices (non-exhaustive list)
Equipment Activities related to pre- and post-extraction, including primary
processing that is powered using renewable energy or is among the most energy
efficient in the country as certified by or based on local energy efficiency
standards and rating systems
Restoration: A process of supporting an ecosystem that has been damaged,
degraded, or destroyed in engaging a path of recovery to a reference state that
ensures its health, integrity, and sustainability. Reforestation and afforestation
increase connectivity between and improve conditions of various ecosystems
through new plantations in places where there is no forest (afforestation) or by
salvaging degraded forest ecosystems through forest plantation processes
(reforestation). All practices for restoration of forests are eligible.
Certification schemes that are eligible for sustainable forest management
• Forest Stewardship Council (FSC).
• Programme for the Endorsement of Forest Certification
• Rainforest Alliance
Non-timber forest products and related services: Activities related to
structuring and implementation of bio-business, including business advisory and
planning, construction of basic infrastructure and facilities, and marketing
mechanisms
Green technologies for forestry: Biodigesters, biofuels, solar and wind energy
systems, other renewable energy systems that meet criteria established in the
energy sector of the taxonomy, water management and treatment plants, other
systems and practices focused on increasing energy and water efficiency
Use of early warning systems or wildfire control measures (to reduce damage
from wildfires)
Use of regeneration material (species and ecotypes) that is less sensitive to
strong winds, timely management of seedling stands, and timely thinning (to
reduce damage to forest stands from increased wind)
Amber Land acquisition with the purpose of adopting sustainable forest management
(transition) practices as defined and certified by credible national schemes
Extraction of timber products to be used as biomass or feedstock for heat
generation and biofuels (phase out by 2030)
Ineligible Exploitation of timber and non-timber products from any species that would lead
to or further its threatened conservation status
Operations on land that has been defined as of high conservation value or
primary forest or as a protected or high-carbon-stock area
Activities that indicate change of land use or forest degradation

DNSH Requirements
 All investments related to agricultural projects must comply with the country's National Forest
Policy, Protected Areas Initiative, or Plant for Pakistan. Important points to monitor include
(applies to small, medium and large producers):
- Location of activity in relation to protected natural areas
- Compliance with regulations related to protected areas or zones of ecological importance
and environmental permits necessary for economic activity execution

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 - Congruence of productive activities with applicable urban planning strategies at the
national, provincial, and local levels
- Verify Error! Reference source not found.
 Forest management plan: A document that outlines the silvicultural systems and practices to
be applied in a forest. The person or entity interested in conducting forestry activities prepares
the plan and must submit it to the relevant authorities for approval. The objective of the plan is
to ensure sustainability of the forest by specifying how harvesting will be conducted and how
the forest will be regenerated after the harvest. This plan is designed to ensure sustainable
forestry use and incorporate the environmental management principles required in the
taxonomy, allowing renewal and preservation of resources and enhancing environmental
benefits. Annex 4 presents an outline for a forest management plan.

Sector Forestry
Activity F2. Forestry plantation
ISIC/PSIC A0200, A0210
Description Green, Amber and Ineligible assets, projects and activities related to forestry
plantation; reforestation for commercial purposes
Objective Climate change mitigation; Climate change adaptation, and resilience;
sustainable use and protection of water resources; protection of healthy
ecosystems and biodiversity; pollution prevention and control; promotion of
circular economy; sustainable land management
Methodology Practice-based approach
Green Basic practices (non-exhaustive list):
Forest management and control: Use of organic and biofertilizers (only
relevant for restoration or replanting of natural forest) according to type of
plantation and monitoring of soil fertility and the nutritional status of the trees
based on local conditions; use of physical and biocontrol of pathogens, pests,
and weeds; fertilizer application equipment and materials that allow timely dosing
Conservation and maintenance of forests: Control and risk reduction,
reinforcements to rangers and forestry officials or similar schemes, support for
forestry community, regional forest protection
Monitoring systems for natural forests control: Adoption and maintenance of
monitoring technology that enables tracking of forest extracts and the forest’s
conservation status, software, hardware, analytical services, and communication
equipment
Forest management and control: Support of community forestry and regional
projects related to forest protection and management
Intermediate practices (non-exhaustive list)
Establishment of forest: Planting, deliberate seeding, or natural regeneration
on non-forested land that was under a different land use or not used
(afforestation)
Nurseries required for adoption of integrated farm management (IFM)
practices: Infrastructure, services, materials needed to operate nurseries,
including water, energy, and biofertilizers for biocontrol, highlighting the
importance of native and climate-resilient species to prevent monoculture risks
and enhance biodiversity

127
 Forest regulations : Improving the regulatory framework and forest governance
to strengthen the environment; developing studies, consultancies, and training in
forestry plantation (afforestation and reforestation)
Windbreak, fire and frost barriers, and living fences for commercial
plantations: Investments that physically and biologically protect the plantation
using trees and shrubs that protect against wind, fire, frost, floods, and pests and
creation of biological corridors in protection and conservation areas within
commercial plantations
Soil conservation and water management for commercial plantations:
Construction and procurement of equipment that allows efficient water
management; planting of trees, which allows penetration and conservation of
water
Block plantation of hybrid species: Establish plantations with fast-growing
hybrids to ensure rapid biomass production while maintaining soil stability
Advanced practices (non-exhaustive list)
Agroforestry integration: Combining timber and fruit trees with seasonal crops
to diversify farmer income and improve soil health
Equipment Activities related to pre- and post-extraction, including primary
processing that is powered using renewable energy or is among the most energy
efficient in the country as certified by or based on local energy efficiency
standards and rating systems
Restoration: Activities related to reestablishing forest areas on previously
forested land, including activities focused on naturally regenerating forest after an
extreme event in line with the Intergovernmental Panel on Climate Change
definition or after a wildfire is defined by national law or equivalent
Terrace farming: Development of terraces in sloped areas to manage water
runoff and prevent soil erosion
Rhodes grass for hay: Introduction of drought-resistant Rhodes grass into
plantation systems for economic and ecological benefits
Certification schemes for sustainable forest management
• Forest Stewardship Council
• Programme for the Endorsement of Forest Certification
• Rainforest Alliance
• National certifications
Non-timber forest products and related services: Activities related to
structuring and implementing bio-businesses, including business advisory and
planning, construction of basic infrastructure and facilities, and marketing
mechanisms.
Green technologies for forestry: Biodigesters, wind energy, biofuels, solar
energy, photovoltaic systems, water management plants, and other systems and
practices focused on increasing energy and water efficiency
Amber Until 2030, nutrient management plans based solely on chemical fertilizers are
(transition) eligible if there is a plan to shift to an integrated approach wherein nitrous oxide
emissions from nitrogen in the consumption of synthetic nitrogen fertilizers is
reduced.

128
 Until 2030, phytosanitary management plans based solely on chemicals are
eligible if there is a plan to shift to an integrated approach wherein biological and
physical control of pests and diseases is prioritized.
Ineligible Use of chemicals listed in the Updated National Implementation Plan for Phasing
out and Elimination of Persistent Organic Pollutants from Pakistan Under
Stockholm Convention Article 7 (A)
Operations on land that has been defined as of high conservation value or
primary forest or as a protected or high-carbon-stock area
Exploitation of timber and non-timber products from any species that would lead
to or further its threatened conservation status
Activities that indicate change of land use or forest degradation

DNSH Requirements
 All investments related to agricultural projects must comply with regulations regarding land
use and environmental protection. Important points to monitor include (applies to small,
medium and large producers):
- Location of the activity in relation to protected natural areas
- Compliance of the activity with regulations related to protected areas or zones of
ecological importance in the country and environmental permits necessary for execution
of the activity
- Congruence of the productive activities with the applicable urban planning plans at the
national, provincial, and local levels
- Verify Error! Reference source not found.
 Forest management plan: A document that outlines the silvicultural systems and practices to
be applied in a forest. The person or entity interested in conducting forestry activities
prepares the plan and submits it to the relevant authorities for approval. The objective of the
plan is to ensure sustainability of the forest by specifying how harvesting will be conducted
and how the forest will be regenerated after the harvest. The plan is designed to ensure
sustainable forestry use and incorporate the environmental management principles required
in the taxonomy, allowing renewal and preservation of resources and enhancing
environmental benefits. Annex 4 presents an outline for a forest management plan.

Sector Forestry
Activity F3. Conservation, restoration, and maintenance of natural, pristine forests
ISIC/PSIC A0200, A0210
Description Green, Amber and Ineligible assets, projects, and activities related to
conservation, restoration, and maintenance of natural, pristine forests, including
restoration of degraded forest soils
Objective Climate change mitigation; Climate change, adaptation, and resilience;
sustainable use and protection of water resources; protection of healthy
ecosystems and biodiversity; pollution prevention and control; promotion of
circular economy; sustainable land management
Methodology Practice-based approach
Green Basic practices (non-exhaustive list)
Conservation and maintenance of forests: Control and risk reduction,
reinforcements to rangers and forestry officials or similar schemes, support for
forestry community and regional forest protection, conservation projects for

129
 protection or remediation of degraded ecosystems, construction and
maintenance of ecological function areas
Management of natural forests: Use of organic and biofertilizers (relevant only
for restoration or replanting of natural forest); use of physical and biocontrol of
pathogens, pests, and weeds
Nurseries with integrated farm management -IFM- practices: Development of
buildings, services, and materials required to operate nurseries, including energy
and water use, and use of seeds and seedlings sourced from native species in
sustainably managed areas
Adoption and maintenance of monitoring technology: Adoption and
maintenance of monitoring technology that enables tracking of the forest extracts
and its conservation status, software, hardware, analytical services, and
communication equipment
Forest management and control: Support to community forestry and regional
projects related to pristine forest protection and management
Support of national programs aimed at conserving forests in protected
areas: Technical and financial support of national programs established in the
NDCs (e.g., Protected Areas Initiative and others that demonstrate conservation
of pristine forest)
Intermediate practices (non-exhaustive list)
Rehabilitation and restoration of forests: Supporting an ecosystem that has
been damaged, degraded, or destroyed in engaging a path of recovery to a
reference state that ensures its health, integrity, and sustainability. Activities
aligned with national policies, the Restoration Initiative, (TRI) or the Convention
on Biological Diversity are also eligible.
Ecosystem services: Facilitation and promotion of schemes for valuing
biodiversity and ecosystem services such as Payments for Ecosystem Services
(PES), carbon sequestration, cultural values, REDD+ (Reduced Emissions from
Deforestation and Forest Degradation activities; services related to design and
development of projects and for certification, verification, and validation of
projects
Support for formation and strengthening of organizations and communities that
support integration and use of sustainable assets and ecosystem services
Financial investments: Land acquisition with the purpose of conservation,
restoration, and maintenance of forests
Forest management norms: Investments in improvement of regulatory
frameworks and forest governance to strengthen the environment, developing
studies, consultancies, and training.
Advanced practices (non-exhaustive list)
Reforestation: Activities related to establishing forest areas on previously
forested land, includes activities focused on naturally regenerating forests after
an extreme event in line with the Intergovernmental Panel on Climate Change
definition, or after a wildfire, as it is defined by national laws or regulations.
Studies and consultancies in the process of reforestation of natural forests are
eligible.
Amber N.A.
(transition)

130
 Ineligible Activities that indicate change of land use and occurring in forest degradation.

DNSH Requirements
 All investments related to agricultural projects must comply with the country's regulations
regarding land use and environmental protection. Important points to monitor include (applies
to small, medium and large producers):
- Location of the activity in relation to protected natural areas
- Compliance of the activity with regulations related to protected areas or zones of
ecological importance in the country and environmental permits necessary for execution
of the activity
- Congruence of productive activities with the applicable urban planning plans at the
national, provincial, and local levels
- Verify Error! Reference source not found.
 Forest management plan: This document outlines the silvicultural systems and practices to
be applied in a forest. The person or entity interested in conducting forestry activities
prepares the plan and submits it to the relevant authorities for approval. The objective of the
plan is to ensure sustainability of the forest by specifying how harvesting will be conducted
and how the forest will be regenerated after the harvest. The plan is designed to ensure
sustainable forestry use and incorporate environmental management principles required in
the taxonomy, allowing the renewal and preservation of resources and enhancing
environmental benefits. Annex 4 presents an outline for a forest management plan.

Fishing and Aquaculture

Fishing and aquaculture present environmental challenges that must be addressed through
sustainable management of marine fisheries and expansion of low-carbon aquaculture. Globally,
this activity is key for achieving the goals of the Paris Agreement, with 21 percent of the reduction in
GHG emissions that must take place in blue economy sectors required in 205018 [59].
Pakistan's valuable marine stocks are being overfished, considerable economic potential is being
lost, and the livelihoods of poor coastal communities are threatened. In the capture fisheries sector,
there are major challenges. First, there has been unrestricted entry and an increase in vessels,
especially larger vessels (longer than 65 feet). The resulting increase in fishing activity and
overfishing has led to declining catch yields and fish stocks. Overall, the major fish stocks are all
below target biomass levels, with nine of the species groups falling below the depletion threshold.
Second, value addition is unoptimized because institutional responsibility is fragmented and
investment in the post-harvest value chain is inadequate. Third, artisanal fisheries are a vital source
of livelihood and food security for marginal coastal communities, but much value is lost because of
poor practices. The socioeconomic systems of these communities are under threat because
overfishing will deplete fishing stocks [60].
Eligibility of investments in this sector must be based on the transition to climate-smart fisheries and
aquaculture practices19 that make a substantial contribution not only to reducing carbon emissions,
but also addressing in a transversal way different environmental objectives that enable efficiency in
use of natural resources to be increased, marine resources and their ecosystem services to be
protected and restored, the resilience of ecosystems to be maintained, and biodiversity loss to be
reduced. The practices described further can contribute to the following environmental objectives.
 Climate change mitigation
 Climate change adaptation and resilience
 Sustainable use and protection of water resources
 Protection of healthy ecosystems and biodiversity

18
Including expansion offshore renewable energy and decarbonization of maritime transport.
19
The practices described can address different stages of the fisheries and aquaculture value chain.

131
  Pollution prevention and control
The following is a non-exhaustive list of national plans and regulations associated with sustainable
fishing or aquaculture:

Table 4. National Plans and Regulations Associated with Sustainable Fishing or Aquaculture

 National Implementation Plan for Sustainable Fisheries and Aquaculture Sector

in Pakistan, 2020-2030
 Sustainable Fisheries Entrepreneurship: A Citizen-Based Approach to Saving Pakistan’s
Unique Marine Environment
 Advancing Sustainable Aquaculture of Pakistan
 National Policy and Strategy for Fisheries and Aquaculture Development in Pakistan
 Fisheries Development Policy and Strategy, 2022
 Indus Basin Development Fund Agreement
 Sindh Fisheries (Amendment) Act, 2011
 Sindh Fisheries Ordinance, 1980 (Amendment, 2005)

The activities in the fishing and aquaculture sector have been mapped as follows:
Activity ISIC/PSIC Code
FA1. Sustainable aquaculture production A031
FA2. Sustainable fishing production A032

The eligibility criteria for the selected activities are as follows.

Sector Fishing and aquaculture
Activity FA1. Sustainable aquaculture production
ISIC/PSIC A031
Description Green, Amber and Ineligible assets, projects, and activities related to sustainable
aquaculture production, including practices for energy transition in production of
aquaculture products and nature-based tools for sustainable aquaculture
production
Objective Climate change mitigation; Climate change, adaptation, and resilience;
sustainable use and protection of water resources; protection of healthy
ecosystems and biodiversity; pollution prevention and control
Methodology Practice-based approach
Green Basic practices (non-exhaustive list):
Development of national sustainable aquaculture policies and plans:
Projects related to improving the strategic or coherent approach and
accountability for management of aquaculture activity, including appropriate
policies and regulations planned and enforced by a lead agency with the capacity
and capability to plan sustainable aquaculture
Intermediate practices (non-exhaustive list):
Water quality monitoring and evaluation: Restorative aquaculture projects to
improve water quality and invest in new restoration techniques (e.g., artificial

132
habitat restoration structures using biodegradable potato starch and coral reef
restoration)
Investments in information systems, technology, and instruments deployed for
measuring, tracking, and reporting physical and chemical indicators of the water
body to achieve sustainable aquaculture management (review and consider the
Environmental Quality Standards for wastewater treatment systems in Pakistan)
Water management: Technologies that reduce water footprint and increase
water conservation
Feed improvement: Research and development of alternative (not wild-caught)
feeds for aquaculture
Waste management: Technological tools for treatment of aquaculture waste
(e.g., biodigesters and treatment plants)
Seed improvement: Scientific research or investments for animal seeds
improvements to increase resilience
Pest and disease control: Scientific research or implementation of measures to
reduce pests and diseases in aquaculture production
Seaweed farming: Practices that mitigate the effects of strong tides, mitigate
destructive effects, capture harmful metals, or help with bioremediation
Integrated multi-trophic aquaculture (IMTA): Systems in which different
species from different trophic levels are farmed together, with the waste
produced by one species providing nutrients for another, enhancing efficiency
Advanced practices (non-exhaustive list):
Wastewater treatment: Collection and treatment of effluents for removal of
contaminants such as nitrogen, phosphorous, oil, grease, and solids discarded
as part of cultivation and processing; technological tools for wastewater
management for aquaculture, including construction and operation of facilities
treating aquaculture wastewater
Recirculation systems: Projects related to recirculation systems that allow
reuse of water in aquaculture and thus reduce discharge of wastewater into the
environment
Use of sustainable aquaculture production certifications or labels: Certified
aquaculture productions: Aquaculture Stewardship Council certification standard,
Friend of the Sea, best aquaculture practices, and Global Good Agricultural
Practices.
Spatial planning for new aquaculture developments: Identification of new
production areas, ensuring that aquaculture takes place in appropriate areas and
minimizes conflict with other resource users through zoning and site selection
Nature-based tools for sustainable aquaculture production demonstrating an
increase in efficiency or ecosystem resilience (e.g., aquatic plant-based
wastewater treatment systems and sustainable algae farming)
Marine ecosystem restoration: Investments in equipment such as drones,
autonomous underwater vehicles, and ocean buoys for measuring and reporting
indicators about water bodies quality, thereby achieving sustainable aquaculture
management
Mangrove planting, restoration, and conservation to protect coastal areas from
flooding

133
 Additional sectoral emissions come from product transport, and emission
reductions are possible [61]. See the transportation sector taxonomy for more
information on fuel efficiency in transport.
Amber N.A.
(transition)
Ineligible N.A.

DNSH Requirements
 All investments related to agricultural projects must comply with regulations regarding
aquaculture (if applicable) and environmental protection. Important points to monitor (applies
to small, medium and large producers)
- Location of activity in relation to key ecological areas
- Compliance of the activity with regulations related to protected areas or zones of
ecological importance and environmental permits necessary for execution of the economic
activity
- Congruence of productive activities with applicable urban planning plans at the national,
provincial, and local levels
- Review and apply Error! Reference source not found.
 Environmental management plan
In addition to complying with applicable regulations, developers of projects that may require
green or transition investment will be able to reveal, through an environmental management plan,
possible environmental impacts of the activity and preventive measures that can be taken to
avoid doing significant damage to natural resources, as well as highlight measures to enhance
environmental benefits on the property where the activity to be financed will be conducted. This
plan will depend on the scale of the project and will apply mainly to medium and large producers.
Annex 3 presents a voluntary scheme for the design of this type of environmental management
plan, as well as some measures for prevention of damage and environmental benefit that can
serve as a guide for preparation of these plans (applies to medium and large producers).

Sector Fishing and aquaculture

Activity FA2. Sustainable fishing production
ISIC/PSIC A032
Description Green, Amber and Ineligible assets, projects, and activities related to sustainable
fishing production, including practices for conservation of coastal and marine
ecosystems in sustainable fishing production and energy transition in industrial
processing of fishing
Objective Climate change mitigation; Climate change, adaptation, and resilience;
sustainable use and protection of water resources; protection of healthy
ecosystems and biodiversity; pollution prevention and control
Methodology Practice-based approach
Green Basic practices (non-exhaustive list):
Wastewater treatment: Collection and treatment of effluents and contaminants
in water such as nitrogen, phosphorous, oil, grease, and solids discarded as part
of the process; technological tools for wastewater management for fisheries
Selective fishing techniques and improved gear in artisanal fisheries: As in
artisanal activity, manual practices are predominantly used in multispecies tasks
(more than one species fished simultaneously); more-selective fishing gear and

134
extraction systems allow for greater efficiency in the capture of target species by
reducing bycatch of non-target species (examples of fishing methods with less
environmental impact: collecting, diving, squid jigging).
Energy efficiency in industrial processing: Evaluation of energy consumption
in cookers, evaporators, dryers, boilers, steam distribution lines, motors, and
pumps enables companies to reduce energy consumption and GHG emissions.
Intermediate practices (non-exhaustive list):
Cultivation of seaweed to mitigate destructive effects of waves: Seaweed
have a structure and flexibility that allows it to act as a natural barrier against
waves. Growing seaweed in coastal areas vulnerable to erosion and the
destructive effects of waves can reduce wave action and protect the coastline,
preserving marine habitat and coastal fishing infrastructure.
Cogeneration of energy and reuse of waste heat: Because of the nature of the
production processes of fishmeal and other fishery products, electrical energy
and useful thermal energy can be simultaneously obtained.
Coastal ecosystem rehabilitation programs: Prevent habitat loss while
enhancing economic activities such as fishing. These programs improve breeding
grounds for fish, increase carbon storage, and prevent soil erosion. (e.g.,
Mangrove Rehabilitation Program, which focuses on restoring mangrove forests
to achieve these environmental and economic benefits)
Advanced practices (non-exhaustive list)
Sustainable fishing production certifications or labels: Marine Stewardship
Council certification standard, Fairtrade Fisheries Standard, Natural Capital
Protocol 2016.
Renewable energy: Implementation of technology for development of tidal
renewable energy for processing plants
Environmentally friendly fishery projects such as carbon sink fishery and
clean water fishery, rice-fish systems, and comprehensive use of saline-alkaline
water for fisheries
Technologies for sustainable fisheries production that increase the efficiency
or resilience of the ecosystem (e.g., selective fishing techniques and better gear
in artisanal fisheries, jigging systems, conversion of wooden fleets from artisanal
fisheries to fiberglass fleets)
Technologies for conservation of marine ecosystems in sustainable
fisheries production that increase the efficiency or resilience of the ecosystem
(e.g., electronic identification devices, real-time monitoring and tracking systems,
early warning systems for early response to extreme weather events)
Sustainable fisheries management to prevent overfishing: Establishment of
scientifically determined catch limits and enforcement of no-take zones to
practice fishing (e.g., wind energy project area), use of selective fishing gear to
reduce bycatch, strengthening of monitoring and surveillance to ensure
compliance
Marine ecosystem restoration: Investments in instruments such as drones,
autonomous underwater vehicles, and ocean buoys for measuring and reporting
on indicators about water bodies, thereby achieving sustainable fishery
management.
Mangrove planting, restoration, and conservation to enhance fisheries:
Investments in conservation and restoration of mangroves, especially in areas

135
 close to human populations that provide a higher return on investment with
respect to fisheries enhancement or increase resilience of coastal areas
Many sectoral emissions come from product transport, and emission reductions
are possible [61]. Refer to the transportation sector taxonomy for more
information on fuel efficiency in transportation.
Amber N. A
(transition)
Ineligible Destructive and illegal fishing practices (overfishing; deep-sea trawling; fish
bombing; blast fishing illegal, unreported, and unregulated Fishing [ [62]]
Species on the International Union for Conservation of Nature Red List for
Endangered, Threatened, or Protected Species or regulated under the
Convention on International Trade in Endangered Species of Wild Fauna and
Flora
Drift net fishing, deep sea bottom trawling, and fishing with the use of explosives
or cyanide are excluded.

DNSH Requirements
 All investments related to agricultural projects must comply with regarding fishing and
environmental protection. Important points to monitor (applies to small, medium and large
producers):
- Location of activity in relation to key ecological areas
- Compliance with regulations related to protected areas or zones of ecological importance
and environmental permits necessary for execution of the economic activity
- Congruence of productive activities with applicable urban planning plans at the national,
provincial, and local levels
- Review and apply Error! Reference source not found.
 Environmental management plan
In addition to complying with the applicable regulations, developers of projects that may required
susceptible green or transition investment will be able to reveal, through an environmental
management plan, possible environmental impacts of the activity and preventive measures that
can be taken to avoid doing significant damage to natural resources and to highlight the
measures to enhance the environmental benefits on the property where the activity to be financed
will conducted. This plan will depend on the scale of the project and will apply mainly to medium
and large producers.
Annex 3 presents a voluntary scheme for the design of this type of environmental management
plan, as well as some measures for prevention of damage and environmental benefit help guide
preparation of these plans (applies to medium and large producers).

136
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143
Annex 1. General Framework—
Alignment, Generic Do No
Significant Harm, and Minimum
Social Safeguards
Pakistan is the fifth most vulnerable country to climate risks [63]. Therefore, in the first phase of the
taxonomy, Pakistan has prioritized identification of economic activities that contribute substantially
to the objectives of climate change mitigation and adaptation.
A separate approach was adopted for the agricultural, forestry, and fishing sector (including
livestock and aquaculture), where identified activities support not just climate change mitigation and
adaptation, but also sustainable use and protection of water resources and protection of healthy
ecosystems and biodiversity (Figure 1).
In subsequent phases of the taxonomy, other environmental objectives such as promotion of
circular economy, protection of healthy ecosystems and biodiversity, sustainable use and protection
of water resources, pollution prevention and control, and sustainable land management will be
considered for substantial contribution. These objectives are currently addressed through do-no-
significant harm (DNSH) requirements.

Figure 1. Sectors Covered in Pakistan’s Green Taxonomy

In addition to making a substantial contribution to climate change mitigation or adaptation, the

activity or project must demonstrate compliance with DNSH requirements, which ensure that the
activities listed in the taxonomy do not cause environmental harm), and with minimum social
safeguards, which ensure that there are no social harms.

Alignment of an Activity or Project with Pakistan’s Green Taxonomy

144
Figure 2 illustrates the steps to follow to verify alignment of an activity, project, or practice with the
taxonomy.

Figure 2. Alignment with Pakistan’s Green Taxonomy

Step 1. Determine whether the activity or project is eligible under the taxonomy: For an activity or
project to be eligible, it must be listed in the taxonomy.
Step 2. Determine whether the activity or project is aligned with the taxonomy
Step 2.1. Determine whether the activity or project substantially contributes to at least one of the
taxonomy’s environmental objectives by assessing the technical screening criteria for
substantial contribution.
The substantial contribution criteria are usually quantifiable, although certain activities have
qualitative criteria or are directly eligible because of their inherent contribution to achievement of
the priority environmental objective. The substantial contribution criteria in the taxonomy were
customized to the needs and reality of Pakistan based on consultations with local sector leaders
and experts.

Step 2.2: The activity or project should evaluate the DNSH requirement (generic and specific if
applicable).
To prevent the activity or project to be financed from causing significant environmental harm during
its execution. The general requirements are set out below, and the specific requirements can be
found in each activity card.
The DNSH requirements are a list of recommendations that guide and ensure that the activities
listed in the taxonomy do not cause negative environmental harm (e.g., installation of a solar power
plant in a special protected natural area). The following is a list of general requirements that can be
applied to all activities. The specific DNSH criteria are listed in the technical annexes.
These DNSH requirements must be complemented with Annex E of the Environmental and Social
Risk Management Implementation Manual that the State Bank of Pakistan developed.

Table 5. Generic Do-No-Significant-Harm (DNSH) Requirements

Environmental Do-No-Significant-Harm (DNSH) Requirements

objective
Climate change All investments in physical assets should incorporate appropriate
adaptation maintenance programs and measures designed to ensure the resilience of
the infrastructure to climate change. The International Standards
Organization 14091:2021 standard can be used as a reference.

145
 Verify whether the activity or project is consistent with the sectoral, regional,
or national adaptation efforts set out in the National Adaptation Plan of
Pakistan.
Sustainable use Identify, assess, and manage risks associated with water use and
and protection conservation, if applicable.20 Verify that the activity to be conducted does not
of water lead to an irrational use of water resources and that the necessary measures
resources will be taken to reduce water consumption and keep costs low.
If assets or activities are located in water-stressed areas,21 ensure that water
use and conservation management plans, developed in consultation with
relevant local entities, have been implemented.
Protection of A new activity or project should not be located in an ecosystem that is
healthy strategic for food security or rich in biodiversity or that provides a habitat for
ecosystems and endangered species (flora and fauna).22
biodiversity
For activities and projects located in or near biodiversity-sensitive areas
(defined as areas identified as United Nations Educational, Scientific, and
Cultural Organization World Heritage sites, key biodiversity areas, or other
protected areas), an appropriate assessment must be performed. The
Convention on Biological Diversity's Voluntary Guidelines on Biodiversity—
Inclusive Impact Assessment and International Finance Corporation
Performance Standard 6 can serve as a reference (depending on the scale of
the project).
Pollution The activity or project should not result in significant greater emissions of
prevention and pollutants to air, water, or soil than before the start of the activity (including
control generation of hazardous waste). Under PEPA, projects that are likely to emit
significant levels of greenhouse gases into the atmosphere or other pollutants
such as waste, wastewater into the soil and water must undergo an
environmental impact assessment.
The National Environmental Quality Standards (NEQS)23 should be reviewed
and adhered to according to the type of activity or project.
Promotion of The activity or project should maximize the efficient use, reduction, repair,
circular recycling, and reuse of materials during the activity's operational life cycle
economy (e.g., using technical datasheets where availability and use of highly durable
and recyclable equipment and components are prioritized, contractual
agreements with recycling companies and integration of the cost of recycling).
A waste management system that is appropriate for the scale of the project
must be included. An environmental impact assessment, as mandated under
PEPA, is essential for projects and industries that are likely to generate
significant amounts of waste. Inappropriate waste disposal can contaminate
groundwater and should trigger fines or penalties as stipulated in national and
provincial regulations.

20
Different use water risk analysis tools are available (e.g., risk assessments by national environmental authorities, water footprint, World
Wildlife Fund Water Risk Filter, World Resources Institute Aqueduct).
21 Water stress areas in Pakistan can be identified using indicators such as the Falkenmark Indicator, which measures the relationship

between available water and population. (See the Water Scarcity Atlas https://waterscarcityatlas.org/water-
stress/#:~:text=A%20simple%20way%20of%20assessing,from%20rivers%2C%20lakes%20and%20aquifers).
22
The exclusion list provided in the Environmental and Social Risk Management Implementation Manual developed by the State Bank of
Pakistan (https://www.sbp.org.pk/smefd/circulars/2022/CL12-Annex-1.pdf) and the EIA Guidelines for Critical and Sensitive Areas, 1997
may serve as a reference. Link here:
23
The National Environmental Quality Standards (NEQS) are national standards of pollution levels by industries.

146
Sustainable Requirements for this objective are relevant for the agricultural, forestry, and
land fishing sector (including livestock and aquaculture) and are described in Annex
management 2. Market Baseline (business as usual) for Energy Consumption in Buildings
for Pakistan
Pakistan does not have an official market baseline for energy consumption in
buildings. Minimum requirements for energy-efficient design and operation of
buildings are defined in the Energy Conservation Building Code (ECBC)
2023, which is designed to increase energy efficiency in the building sector by
15 to 20 percent.
ECBC 2023 is aligned with international standards such as the American
Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE)
or the American National Standards Institute to reduce energy consumption
and mitigate the impacts of climate change. It provides an implementation
and enforcement plan covering energy-efficient and low-emission
construction materials, passive building design, energy appliance monitoring
devices, electric vehicle charging points, energy management systems,
building insulation, and renewable and geothermal energy.
The purpose of this annex is to compare the minimum energy performance
that a building that complies with ASHRAE 90.1 or ECBC 2023 requires.

Market Baseline
The lack of reliable information on the energy performance of buildings in
Pakistan requires use of international standards or green building
certifications to assess when an asset can be labeled “green” or eligible
under sustainable finance criteria.
The International Capital Markets Association promotes development of the
international capital and securities market, defining rules, principles, and
recommendations for the financial industry world-wide, and supports
development of sustainable finance by defining principles and guidelines in
the bond and wider debt capital markets.
International Capital Markets Association guidelines for buildings propose a
series of indicators to capture and illustrate the environmental and
sustainability benefits of projects related to green buildings: energy
performance, carbon performance, water efficiency and savings, waste
management, and certification standards, if available.
Usual guidelines for green buildings are that they:
 Should be certified by an international or credible national standard
 Must have 20 percent greater efficiency than baseline
 Must be able to report savings in energy, water, and GHG emissions
Because there is no official baseline for Pakistan, energy efficiency must be
calculated against the baseline that each standard or certification has defined
or against the minimum performance required by ECBC 2023. One of the
most used standards is ASHRAE 90.1, which sets minimum energy efficiency
requirements for buildings. Climate zones influence the baseline
characteristics for energy performance comparisons. Pakistan has multiple
climate zones because of its diverse geography, and these zones dictate the
baseline characteristics for building energy efficiency comparisons. Below is
an overview of these characteristics.

147
Baseline Building Characteristics:
ASHRAE 90.1
The baseline characteristics for a building in Pakistan depend on in which
climate zone the building is located. Each climate zone has different
assumptions for building envelope, heating, ventilation, air conditioning
(HVAC), lighting, and other systems in the baseline model. Below are the
main characteristics for the baseline, based on general ASHRAE guidelines.

Building Envelope
Insulation and U-factor: The baseline building’s wall, roof, and window
insulation values (R-value) and heat transfer rate (U-value) are defined based
on the climate zone. In hot, humid areas (Zone 1A), the building will have
lower insulation values than in cold areas (Zone 5B). Glazing (window) U-
values are also based on climate, with lower U-values (better insulation)
required in cooler zones (e.g., Zone 5B).
Solar heat gain coefficient: This measures the amount of solar radiation
admitted through windows, used especially in hot climates. Lower values are
typically required in hot, sunny areas (e.g., Zones 2B and 3B) to reduce
cooling loads.

HVAC Systems
System type: The baseline building system type depends on the building’s
size and function. For example, in small commercial buildings, the baseline
HVAC system could be a packaged rooftop air conditioner. In larger
commercial buildings, it might include chiller-based systems or variable air
volume systems.
Efficiency rating: HVAC equipment in the baseline building will use the
minimum efficiency standards that ASHRAE has set for the climate zone. In
hot, humid climates like Karachi (Zone 1A), cooling system efficiencies will be
a key metric, whereas for cold climates, heating system efficiency is more
relevant.

Lighting
Lighting power density: ASHRAE 90.1 specifies baseline lighting power
density (the amount of power that lighting uses per square foot or square
meter) for different building types. The baseline typically assumes use of
standard fluorescent or compact fluorescent lighting systems. In modern
designs, efficient light-emitting diode lighting often surpasses this baseline.
Lighting controls: The baseline will specify basic lighting control
requirements, such as occupancy sensors; advanced controls such as
daylight harvesting may be required only in high-performance designs.

Service Water Heating

148
Water heater efficiency: The baseline model assumes use of standard-
efficiency water heaters. In hotter climates such as Zones 1A and 2B, the
focus would be on reducing standby heat losses and minimizing the load on
cooling systems. For colder climates, water heating becomes more significant
in the overall energy balance of the building.

Ventilation and Air Leakage

Air infiltration: Baseline buildings have specific infiltration rates that indicate
how much air leakage occurs through cracks and gaps in the building
envelope. In hot-dry and hot-humid zones (1A, 2B), this is critical, because
infiltration can significantly increase cooling loads.
Ventilation standards: Minimum outside air requirements are specified for
maintaining indoor air quality, but excessive ventilation increase heating or
cooling loads.

Renewable Energy
In most cases, the baseline does not assume the presence of renewable
energy systems such as photovoltaics. These systems are considered to
lower the energy consumption of the proposed building.

Baseline Building Characteristics:

ECBC 2023

Building Envelope
Insulation and U-value: Sets limits for U-values (heat transfer rates) to
reduce heat gain or loss through walls, roofs, and windows. These U-values
are tailored to local climate conditions and building types. The lower the U-
value, the better the insulation.
Solar heat gain coefficient: Defines SHGC values for windows and glass
facades to reduce solar heat gain. These values vary depending on the
window-to-wall ratio and are lower for buildings with large glass areas,
ensuring that buildings are protected from excessive solar radiation.

HVAC Systems
System efficiency: Mandates minimum efficiency standards for HVAC
systems. Efficiency ratings are climate adapted, with a focus on cooling (for
hot climates) and heating (for colder zones).
Passive ventilation: Encourages natural ventilation and passive cooling
techniques, especially in frequently occupied areas, to reduce reliance on
mechanical ventilation systems.

149
Lighting
Lighting power density: Prescribes limits on the amount of power that
lighting systems use per square meter. These values are designed to ensure
energy-efficient lighting solutions, such as light-emitting diode and compact
fluorescent systems.
Lighting controls: Include provisions for automatic lighting controls, such as
occupancy sensors and daylight harvesting, to minimize energy consumption
when spaces are unoccupied or naturally lit.

Service Water Heating

Water heater efficiency: The baseline assumes standard-efficiency water
heaters with insulation requirements to minimize energy loss, especially in
commercial buildings and residential clusters.
Renewable water heating: Encourages use of solar water heating systems
to reduce energy demand for heating water.

Ventilation and Air Leakage

Air infiltration: Establishes air leakage limits for windows, doors, and other
openings, which are set to reduce uncontrolled ventilation, which can lead to
energy loss in hot and cold climates.
Mechanical ventilation standards: Minimum ventilation rates are prescribed
to ensure indoor air quality, without leading to excess energy consumption
due to over-ventilation.

Renewable Energy
Photovoltaic systems: Promote integration of renewable energy systems
such as solar photovoltaic panels on rooftops and façades, especially in
commercial and large residential buildings.
Energy monitoring: The code encourages use of energy management
systems to monitor and optimize energy use in buildings, supporting
Pakistan's efforts to use sustainable building practices.

Comparison of U-Value Requirements

Table 8 compares U-values for building envelope components between
ASHRAE 90.1 and ECBC 2023 for a specific climate zone 1A (Very Hot-
Humid), which includes cities like Karachi, as an example for the comparison.

Table 6. Comparison of U-Values Between American Society of Heating,

Refrigerating, and Air-Conditioning Engineers (ASRAE) 90.1 and Energy
Conservation Building Code (ECBC) 2023

Component

150
 ASHRAE 90.1 U-Value ECBC 2023 U-Value
(W/m²K) (W/m²K)
Exterior walls 0.57 (maximum) 0.57 (maximum)
Roof 0.44 (maximum) 0.44 (maximum)
Windows
Non-metal framed 2.87 (clear, SHGC ≤ 0.25) 3.50 (SHGC ≤ 0.35)
Metal framed 5.80 (single glazed, SHGC 2.50 (SHGC ≤ 0.35)
≤ 0.25)

Notes: ASHRAE 90.1 U-values for windows and skylights vary based on glazing type (clear or tinted,
single or double), frame type (metal or non-metal), and solar heat gain coefficient (SHGC).
ECBC 2023 generally prescribes slightly higher U-values for windows and doors, than ASHRAE making it
less strict for some components, while maintaining similar U-values for walls and roofs.

Annex 3. Scheme for the Environmental Management Plan, Measures for

Prevention of Damage, and Environmental Benefits for Land Use Sectorand
Annex 4. Suggested Outline for a Forest Management Plan4.
Climate change The activity or project does not increase operational consumption of
mitigation hydrocarbons (fossil gas, oil, or coal and their derivatives) or lead to the lock-
in of hydrocarbons.

Step 2.3: The entity developing the activity or project should evaluate compliance with the
minimum social safeguards, which ensure that activities are in line with minimum social
conventions (e.g., labor laws, land tenure rights, international human rights commitments).
Although the substantial contribution and the DNSH criteria are applied at the activity level, the
minimum social safeguards criteria are applied at the entity level.
Minimum Social Safeguards
The eligible activity or project must not generate a social harm. To assess these risks at the entity
level, it is recommended that the activity or project adhere to the requirements established in Annex
D and E of the Environmental and Social Risk Management Implementation Manual that the State
Bank of Pakistan developed or the IFC Performance Standards.
Applicable IFC Performance Standards
 Performance Standard 1: Assessment and management of environmental and social risks
and impacts.
 Performance Standard 2: Labor and working conditions
 Performance Standard 4: Community health, safety, and security
 Performance Standard 5: Land acquisition and involuntary resettlement
 Performance Standard 7: Indigenous peoples
 Performance Standard 8: Cultural heritage

151
Annex 2. Market Baseline (business
as usual) for Energy Consumption
in Buildings for Pakistan
Pakistan does not have an official market baseline for energy consumption in buildings. Minimum
requirements for energy-efficient design and operation of buildings are defined in the Energy
Conservation Building Code (ECBC) 2023, which is designed to increase energy efficiency in the
building sector by 15 to 20 percent.
ECBC 2023 is aligned with international standards such as the American Society of Heating,
Refrigerating, and Air-Conditioning Engineers (ASHRAE) or the American National Standards
Institute to reduce energy consumption and mitigate the impacts of climate change. It provides an
implementation and enforcement plan covering energy-efficient and low-emission construction
materials, passive building design, energy appliance monitoring devices, electric vehicle charging
points, energy management systems, building insulation, and renewable and geothermal energy.
The purpose of this annex is to compare the minimum energy performance that a building that
complies with ASHRAE 90.1 or ECBC 2023 requires.

Market Baseline
The lack of reliable information on the energy performance of buildings in Pakistan requires use of
international standards or green building certifications to assess when an asset can be labeled
“green” or eligible under sustainable finance criteria.
The International Capital Markets Association promotes development of the international capital and
securities market, defining rules, principles, and recommendations for the financial industry world-
wide, and supports development of sustainable finance by defining principles and guidelines in the
bond and wider debt capital markets.
International Capital Markets Association guidelines for buildings propose a series of indicators to
capture and illustrate the environmental and sustainability benefits of projects related to green
buildings: energy performance, carbon performance, water efficiency and savings, waste
management, and certification standards, if available.
Usual guidelines for green buildings are that they:
 Should be certified by an international or credible national standard
 Must have 20 percent greater efficiency than baseline
 Must be able to report savings in energy, water, and GHG emissions
Because there is no official baseline for Pakistan, energy efficiency must be calculated against the
baseline that each standard or certification has defined or against the minimum performance
required by ECBC 2023. One of the most used standards is ASHRAE 90.1, which sets minimum
energy efficiency requirements for buildings. Climate zones influence the baseline characteristics for
energy performance comparisons. Pakistan has multiple climate zones because of its diverse
geography, and these zones dictate the baseline characteristics for building energy efficiency
comparisons. Below is an overview of these characteristics.

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Baseline Building Characteristics: ASHRAE 90.1
The baseline characteristics for a building in Pakistan depend on in which climate zone the building
is located. Each climate zone has different assumptions for building envelope, heating, ventilation,
air conditioning (HVAC), lighting, and other systems in the baseline model. Below are the main
characteristics for the baseline, based on general ASHRAE guidelines.

Building Envelope
Insulation and U-factor: The baseline building’s wall, roof, and window insulation values (R-value)
and heat transfer rate (U-value) are defined based on the climate zone. In hot, humid areas (Zone
1A), the building will have lower insulation values than in cold areas (Zone 5B). Glazing (window) U-
values are also based on climate, with lower U-values (better insulation) required in cooler zones
(e.g., Zone 5B).
Solar heat gain coefficient: This measures the amount of solar radiation admitted through
windows, used especially in hot climates. Lower values are typically required in hot, sunny areas
(e.g., Zones 2B and 3B) to reduce cooling loads.

HVAC Systems
System type: The baseline building system type depends on the building’s size and function. For
example, in small commercial buildings, the baseline HVAC system could be a packaged rooftop air
conditioner. In larger commercial buildings, it might include chiller-based systems or variable air
volume systems.
Efficiency rating: HVAC equipment in the baseline building will use the minimum efficiency
standards that ASHRAE has set for the climate zone. In hot, humid climates like Karachi (Zone 1A),
cooling system efficiencies will be a key metric, whereas for cold climates, heating system efficiency
is more relevant.

Lighting
Lighting power density: ASHRAE 90.1 specifies baseline lighting power density (the amount of
power that lighting uses per square foot or square meter) for different building types. The baseline
typically assumes use of standard fluorescent or compact fluorescent lighting systems. In modern
designs, efficient light-emitting diode lighting often surpasses this baseline.
Lighting controls: The baseline will specify basic lighting control requirements, such as occupancy
sensors; advanced controls such as daylight harvesting may be required only in high-performance
designs.

Service Water Heating

Water heater efficiency: The baseline model assumes use of standard-efficiency water heaters. In
hotter climates such as Zones 1A and 2B, the focus would be on reducing standby heat losses and
minimizing the load on cooling systems. For colder climates, water heating becomes more
significant in the overall energy balance of the building.

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Ventilation and Air Leakage
Air infiltration: Baseline buildings have specific infiltration rates that indicate how much air leakage
occurs through cracks and gaps in the building envelope. In hot-dry and hot-humid zones (1A, 2B),
this is critical, because infiltration can significantly increase cooling loads.
Ventilation standards: Minimum outside air requirements are specified for maintaining indoor air
quality, but excessive ventilation increase heating or cooling loads.

Renewable Energy
In most cases, the baseline does not assume the presence of renewable energy systems such as
photovoltaics. These systems are considered to lower the energy consumption of the proposed
building.

Baseline Building Characteristics: ECBC 2023

Building Envelope
Insulation and U-value: Sets limits for U-values (heat transfer rates) to reduce heat gain or loss
through walls, roofs, and windows. These U-values are tailored to local climate conditions and
building types. The lower the U-value, the better the insulation.
Solar heat gain coefficient: Defines SHGC values for windows and glass facades to reduce solar
heat gain. These values vary depending on the window-to-wall ratio and are lower for buildings with
large glass areas, ensuring that buildings are protected from excessive solar radiation.

HVAC Systems
System efficiency: Mandates minimum efficiency standards for HVAC systems. Efficiency ratings
are climate adapted, with a focus on cooling (for hot climates) and heating (for colder zones).
Passive ventilation: Encourages natural ventilation and passive cooling techniques, especially in
frequently occupied areas, to reduce reliance on mechanical ventilation systems.

Lighting
Lighting power density: Prescribes limits on the amount of power that lighting systems use per
square meter. These values are designed to ensure energy-efficient lighting solutions, such as light-
emitting diode and compact fluorescent systems.
Lighting controls: Include provisions for automatic lighting controls, such as occupancy sensors
and daylight harvesting, to minimize energy consumption when spaces are unoccupied or naturally
lit.

Service Water Heating

Water heater efficiency: The baseline assumes standard-efficiency water heaters with insulation
requirements to minimize energy loss, especially in commercial buildings and residential clusters.
Renewable water heating: Encourages use of solar water heating systems to reduce energy
demand for heating water.

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Ventilation and Air Leakage
Air infiltration: Establishes air leakage limits for windows, doors, and other openings, which are set
to reduce uncontrolled ventilation, which can lead to energy loss in hot and cold climates.
Mechanical ventilation standards: Minimum ventilation rates are prescribed to ensure indoor air
quality, without leading to excess energy consumption due to over-ventilation.

Renewable Energy
Photovoltaic systems: Promote integration of renewable energy systems such as solar
photovoltaic panels on rooftops and façades, especially in commercial and large residential
buildings.
Energy monitoring: The code encourages use of energy management systems to monitor and
optimize energy use in buildings, supporting Pakistan's efforts to use sustainable building practices.

Comparison of U-Value Requirements

Table 8 compares U-values for building envelope components between ASHRAE 90.1 and ECBC
2023 for a specific climate zone 1A (Very Hot-Humid), which includes cities like Karachi, as an
example for the comparison.

Table 6. Comparison of U-Values Between American Society of Heating, Refrigerating, and

Air-Conditioning Engineers (ASRAE) 90.1 and Energy Conservation Building Code (ECBC)
2023

Component
ASHRAE 90.1 U-Value (W/m²K) ECBC 2023 U-Value (W/m²K)
Exterior walls 0.57 (maximum) 0.57 (maximum)
Roof 0.44 (maximum) 0.44 (maximum)
Windows
Non-metal framed 2.87 (clear, SHGC ≤ 0.25) 3.50 (SHGC ≤ 0.35)
Metal framed 5.80 (single glazed, SHGC ≤ 0.25) 2.50 (SHGC ≤ 0.35)

Notes: ASHRAE 90.1 U-values for windows and skylights vary based on glazing type (clear or tinted, single or double), frame type (metal
or non-metal), and solar heat gain coefficient (SHGC).
ECBC 2023 generally prescribes slightly higher U-values for windows and doors, than ASHRAE making it less strict for some
components, while maintaining similar U-values for walls and roofs.

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Annex 3. Scheme for the
Environmental Management Plan,
Measures for Prevention of Damage,
and Environmental Benefits for
Land Use Sectors
Environmental management in the property plan
To enable adoption of environmental management to be evaluated, there must be a planning of
the productive transition that includes specific data on the property, its location and productive
context, and the modifications or improvements that the proponent wishes to make. The minimum
information that the plan must include are:
 Diagnosis with the characteristics of the area, with supporting maps, including type
of natural environment, production model, yields, challenges, and opportunities
 Objective of the investment, modification or productive change
 Description of the environmental situation of the property and the area.
 Definition of the transition, with changes to be made, investments and inputs needed,
the route to be followed, and the timeline specified
Expected results with their respective impact indicators, such as an increase in productivity,
efficiency in use of natural resources, and other metrics of improvement.

Following is a guide to measures to protect natural resources against harms associated with
production that may be part of environmental management plans.

Table 7. Preventive Compliance Requirements for Resource Protection (DNSH) - Land Use
Sectors

Protection of natural resources

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 Protection of healthy Pollution prevention Sustainable use and Promotion of
ecosystems and and control protection of water circular economy
biodiversity resources
Avoid habitat Have an erosion Protect riparian Use renewable
modification. mitigation plan in corridors, wetlands, energy.
accordance with and other bodies of
Protect natural forest Use at least 20
activities to be carried water.
areas. percent local labor
out.
Protect and restore
Set aside of at least Use at least 20
watershed tributary
30 percent of the percent local raw
gallery forest.
property for materials.
regeneration or Demonstrate
Improve the alliances
conservation. consistency with
with local public, civil
watershed, wetland,
Prevent introduction of or private institutions.
and other water
non-native species or
resource management
species with invasive
plans.
tendencies.
pollution control of
Have an agrochemical
high content of
management plan and
sediments, nutrients
an integrated pest
and agrochemicals.
management plan.
Regulate the volume
of water extracted and
returned to natural
sources, increasing
the efficiency of use
per unit of production.

The following are some measures to enhance environmental and productive benefits that can be
broadly introduced in all sectors of land use, including restoration, regeneration, rehabilitation, and
recovery of natural systems and climate action. Listed below are some measures that can be
considered:

Table 8. Measures to Enhance Environmental and Productive Benefits - Land Use Sectors

Protection of healthy Pollution prevention Sustainable use and

ecosystems and and control protection of water
biodiversity resources
Restoration Increase the diversity and Use tillage techniques Reforest and restore
and abundance of species, that involve minimal areas of production,
promotion seeking to connect non- disturbance (reduction or catchment, and
degraded fragments and elimination of tillage, regulation of water and
recover already-attenuated biomass removal, microclimate.
areas under a biological overgrazing, burning of
Restore, rehabilitate, or
corridor or buffer zone vegetation cover).
recover streams,
approach.
Improve the structure and springs, and wetlands
Plant and maintain porosity of the soil, using with their corresponding
vegetation: trees, shrubs, deep-rooted species gallery forests. Identify
mangroves, and other adapted to the area specific area to be
natural ecosystems. restored.

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 according to soil and
climatic conditions.
Encourage use of species Modernize the Use technologies and
that are native or management of humidity methods to control the
compatible with the original and surface runoff in transport and
habitat. vulnerable areas (dry and deposition of
eroded). sediments, nutrients
Combat preexisting invasive
and agrochemicals.
species without disrupting
the biological balance. Stabilize sloping land
through works, erosion
control measures, and
planting on contour
lines, barriers, and
living covers.
Strengthen practices that Measure organic matter Increase efficiency by
allow rational use of content and biological identifying sources of
nutrients and biological activity as indicators of water used and
control of pests, diseases, fertility. verifying consumption,
and parasites, promoting losses, and yields.
development of desirable
Promote the
organisms that act as
establishment of water
natural predators,
harvesting systems
decomposers, and
where justified.
parasitoids.
Indicate the goal of
efficiency in property
planning.
Climate Promote establishment of Prevent landslides and Reduce potential for
action: water harvesting systems landslides in cycles of reservoir
adaptation where justified. high precipitation. sedimentation.
Indicate the goal of Prevent erosion due to Adjust water planning
efficiency in property wind action. criteria.
planning.
Prevent desertification Protect and optimize
and other forms of the water supply for
climate degradation. non-agricultural uses
Ensure minimum
ecological flows (for
freshwater and coastal
ecosystem functions),
especially during
periods of water
scarcity.
Climate Increase use of plant Increase and retain Reduce methane
action: species that sequester aboveground, emissions from
mitigation more carbon. groundwater, and soil treatment systems and
carbon content by using water-intensive crops.
Protect forest, coastal, and
good tillage and mulching
marine habitats (blue
practices with improved
carbon).
pastures and woody

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Reduce methane emissions species in livestock
from agricultural waste systems.
management.
Reduce nitrous oxide
Reduce emissions from emissions in fertilized
biomass burning. soils.
Reduced use of nitrogen
fertilizers.

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Annex 4. Suggested Outline for a
Forest Management Plan
1. Introduction and Objectives of the Forest Management Plan
2. Description of Project Area (Provide geographic description of the property, including its location,
boundaries, and size. This section should characterize natural resources in the area and
socioeconomic context and identify relevant environmental authorities and legal requirements
applicable to the project area.)
2.1. Cartography and Georeferencing
2.2. Identification of Areas
2.3. History of Harvesting in the project area
2.4. Physical Characteristics of the Area
2.4.1. Topography and Soils
2.4.2. Hydrology
2.4.3. Climatology
2.5. Biotic Characteristics of the Area, Including Ecosystems and Biodiversity
2.6. Socioeconomic Features
3. Forest Inventory
3.1. Cartography or mapmaking of the Forest in the Project Area
3.2. Design of Forest Sampling (identifying species and sampling size, method, and procedures)
3.3. Results of Forest Inventory
3.4. Floristics Aspects
4. Technical Justification of the Species and its Volumes (criteria applied and the parameters for
evaluating the criteria employed and its justification)
5. Forest Census of the Species (location, species, volume, quantity, diameters)
6. Forest Harvesting Plan
6.1. Forest Management Guidelines
6.2. Silvicultural Plan (diagnosis of regeneration and proposed silvicultural treatments)
6.3. Environmental Management and Social Factors
6.4. Monitoring

Conclusion
Although it is not feasible to comprehensively compare the baselines defined according to ASHRAE
90.1 and ECBC 2023 because the requirements are specific for each climate zone, and it would
require modeling sets of buildings to understand in detail the difference between them, the technical
characteristics of both are similar.
The baseline characteristics of buildings under ECBC 2023 align with the goals of reducing energy
consumption, improving insulation, and integrating renewable energy systems. Like ASHRAE 90.1,
EBCB 2023 focuses on minimizing heat transfer, optimizing HVAC efficiency, and promoting

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energy-efficient lighting and water heating, but it emphasizes renewable energy adoption and
passive design strategies tailored to Pakistan’s climate and energy needs.
Pakistan’s treen taxonomy can use both references for activities in the construction sector, including
the evidence of a 20 percent reduction in energy consumption from the baseline calculated from
either of these standards.

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