For years, Zambia’s ambition to grow a green economy had been blocked by misalignments of the definition of the term “green finance”. Across the private sector and public sphere, banks, pension funds, insurers, and corporates had all been using different interpretations and definitions of the term, making it difficult to assess which efforts towards driving the country’s green transition forward were truly sustainable. Without a national definition or common classification system, project developers struggled to structure bankable green projects, and investors could not easily compare or evaluate opportunities. This lack of clarity created uncertainty, slowed decision-making, and left significant pools of potential green capital sitting on the sidelines instead of flowing into climate-resilient and nature-positive investments.

Compounding this issue, institutions had no consistent way to track how much finance was genuinely supporting environmental and climate priorities. There was no standard tagging or reporting system for green financial flows, meaning regulators and policymakers were effectively operating in the dark, unable to say how much capital was being mobilised, which sectors were benefiting, or whether incentives were working. 

Strides had been made in ensuring the development of enabling policies such as the Green Bond Guidelines in 2019, the provision of a zero-rated withholding tax on green bond coupons, and the reduction of SEC registration fees, however, uptake remained limited. To date, Copperbelt Energy Corporation (CEC) Renewables is Zambia’s only green bond issuer with a USD 200 million programme. Many potential issuers lacked the technical capacity to structure green projects without costly external support. It was against this backdrop that the Zambia Green Finance Taxonomy emerged as a tool to bring coherence, transparency, and credibility to the country’s green finance ecosystem.

Closing the year 2025, five years away from the milestone 2030 for a number of national instruments, Zambia officially launched the Zambia Green Finance Taxonomy (ZGFT), a landmark achievement that provides a unified national framework for defining, classifying, and reporting environmentally sustainable economic activities. Supported by the United Nations Development Programme (UNDP), through the Biodiversity Finance Initiative (BIOFIN) Zambia in collaboration with the Green Finance Mainstreaming Working Group, the taxonomy is perfectly situated to fill the long-standing gaps mentioned above and strengthen the national architecture for green bonds, green loans, sustainability-linked financing, and broader climate investment.

“The ZGFT will strengthen the backbone of Zambia’s green finance ecosystem by ensuring that every kwacha labeled ‘green’ is traceable, credible, and aligned with Zambia’s national priorities”, reflected UNDP’s Head of the Environment and Energy Unit, Carol Mwape-Zulu. 

“We are only 5 years shy of the 2030 deadline for the Sustainable Development Goals, so tools and frameworks like the ZGFT are critical to dismantling roadblocks and accelerating progress towards achieving SDG 3 and other economic goals at the national and global level”, she added. The ZGFT is expected to serve as one of the critical tools to help close the financing gap by improving investor confidence, promoting project bankability, and aligning national investment flows with global sustainable finance standards.

Comprehensive Environmental Objectives at the Core

The ZGFT directly addresses the above-mentioned barriers by offering a clear, practical reference point for what constitutes a green economic activity. Its sector-specific guidance and technical screening criteria now provide a checklist-style tool that helps project developers design bankable green projects, while enabling lenders and investors to evaluate alignment consistently and cost-effectively. This simplification is particularly valuable for Micro, Small and Medium Enterprises (MSMEs) seeking green loans, who can now work with financial institutions using the same assessment framework. Although currently voluntary, the ZGFT provides a solid foundation for future sector-specific guidelines or regulatory instruments that financial regulators may choose to develop as Zambia’s sustainable finance market matures.

The ZGFT is built around five core Environmental Objectives (EOs) that collectively support a climate-resilient and environmentally secure national economy:

• Climate Change Mitigation – supporting low-carbon pathways through renewable energy, energy efficiency, and emissions reduction.
• Climate Change Adaptation – enhancing resilience in high-risk sectors including agriculture, infrastructure, and water systems.
• Sustainable Use and Protection of Water and Marine Resources – promoting efficient water use and safeguarding ecosystems.
• Transition to a Circular Economy – reducing waste and encouraging recycling and resource efficiency.
• Pollution Prevention and Control – minimizing air, water, and soil pollution through cleaner technologies and better waste handling.

These objectives provide a structured lens through which economic activities can be evaluated for their potential environmental benefits.

Clear and Practical Guidance for Implementation Across Key Sectors

Without any national framework defining what qualified as an environmentally sustainable activity, this created fragmented interpretations across sectors. Energy, agriculture, mining, forestry, transport, tourism, water, and waste management all operated without a consistent set of criteria or technical screening guidelines. The ZGFT directly addresses this by offering detailed, user-friendly guidance across eight priority economic sectors, including: agriculture, energy and energy efficiency, forestry, mining, tourism, transportation, waste, and water. For each eligible activity, the taxonomy provides: 

• Technical Screening Criteria (TSC) defining what qualifies as a substantial contribution to an environmental objective.
• Do No Significant Harm (DNSH) requirements ensuring that green activities do not negatively impact other environmental objectives; and
• Minimum Social Safeguards to protect labour rights and community welfare.

The TSC further acts as a practical checklist to determine whether a project or investment is considered taxonomy-aligned, helping reduce ambiguity for financiers, regulators, and developers alike.

Driving Investment and Unlocking New Opportunities

By providing clarity, consistency, and transparency, the ZGFT is poised to unlock a larger, more dynamic market for green bonds, green loans, and sustainability-linked instruments, in the process, making Zambia more attractive to impact-oriented investors seeking credible, verifiable green pipelines.

The taxonomy empowers financial institutions to screen and tag green assets confidently, project developers to structure projects in line with global best practice, regulators to develop future policies based on a unified national reference, and the public sector to monitor progress toward climate and environmental commitments.

A Significant Step Toward a Greener Future

The introduction of the ZGFT marks a transformative shift in how the private and public sector identifies, classifies, and channels capital toward sustainable development. With the taxonomy in place, supported by a robust tagging and reporting framework, Zambia is now better positioned to scale green investment, address long-standing data and classification gaps, and build a more resilient, inclusive, and environmentally secure economy.