Impact Policy Tracker Policy

Panama’s Sustainable Finance Taxonomy



Panama’s Sustainable Finance Taxonomy was launched in 2024, making it the third in Latin America and the Caribbean - and the first in Central America. It was developed through a collaborative process led by the Panama Sustainable Finance Task Force (GTFS), the Superintendency of Banks (SBP), the Superintendency of the Securities Market (SMV), and the Superintendency of Insurance and Reinsurance (SSRP), in coordination with the Ministry of Environment (MiAmbiente) and the Ministry of Economy and Finance (MEF). The initiative was supported technically by UNEP FI and financially by the Green Climate Fund and the European Union through its EUROCLIMA programme.



Highlights

  • First Taxonomy Integrated into NDCs 3.0: Panama’s Sustainable Finance Taxonomy is the first in the world to be formally integrated into a country’s Nationally Determined Contribution (NDC 3.0). As part of Panama’s broader climate governance framework, the taxonomy provides investment criteria directly linked to national climate targets, aligning capital flows with the goals of the Paris Agreement and enhancing transparency, coherence, and accountability in climate finance.

  • Aligned with International, Regional, and Domestic Frameworks: Panama’s Sustainable Finance Taxonomy is inspired by and aligned with key global and regional frameworks. It uses the EU Taxonomy as a primary reference, while also drawing on the LAC Common Taxonomy Framework and the draft Regional Green Finance Taxonomy for Central America (developed by the Central American Council of Superintendents of Banks, Insurance and Other Financial Institutions – CCSBSO). It further incorporates lessons from the taxonomies of Mexico and Colombia, and -like them- includes guidance for agriculture, livestock, and forestry, reinforcing a shared regional emphasis on land-use sectors as core to sustainable finance strategies.

Government’s Role:
Market Facilitator


Country:
Panama

Policy Type:
Sustainable Finance Taxonomies

Year: 2024

Responsible Institution:
Superintendency of Banks of Panama (SBP), Superintendency of Securities Markets (SMV) and the Superintendency of Insurance and Reinsurance of Panama (SSRP)

Additional information:
The Taxonomy of Sustainable Finance of Panama, a New Milestone in the Region

Sustainable Finance Taxonomies

What are Sustainable Finance Taxonomies?

Sustainable finance taxonomies provide a common language to classify and compare sustainable economic activities. They can be thought of as an encyclopaedia of sustainable activities: they list and define which sectors and actions qualify as sustainable based on specific criteria - either qualitative (e.g., social safeguards) or quantitative (e.g., emission thresholds). As such, taxonomies help assess whether activities align with sustainability standards and channel investments towards projects that support environmental and social objectives, while reducing the risk of greenwashing. As of July 2024, over 53 taxonomies have progressed worldwide, with 24 fully developed.

In practice, taxonomies are used by companies and investors to align portfolios, business activities, and financial products with sustainable objectives. Governments also use them to issue and enforce disclosure regulations, develop sustainability standards and labels, issue taxonomy-aligned bonds, and monitor progress on national and international commitments. While green taxonomies are the most widespread -focusing on activities that support environmental goals- there is growing interest in developing social taxonomies (e.g. the EU’s proposal to develop a Social Taxonomy), which aim to classify activities that promote social objectives such as human rights and equality.

For more information on taxonomies, visit SBFN Toolkit on Sustainable Finance Taxonomies (May, 2024), NATIXIS New Geography of Taxonomies (July, 2023) and PRI’s Implementation guide for sustainable investment policy and regulation tools: taxonomies of sustainable economic activities (June, 2022)