A key milestone for sustainability in Armenia came in 2025 with the adoption of the Green Taxonomy thanks to the efforts of the World Bank and a multistakeholder consortium of policymakers, organizations, and experts. We spoke to Dr. Irina Ghaplanyan, Senior Climate Change Specialist at the World Bank, on what this is and what it means for Armenia’s future.
Interview : Irina Ghaplanyan, Nazareth Seferian
Photo : World Bank
Dr. Ghaplanyan, for our readers who may be encountering these concepts for the first time, could you explain what a green taxonomy means in practical terms and why establishing these classification systems is crucial for countries in the South Caucasus region as they transition toward sustainable economic models?
— In simple terms, a green taxonomy is a kind of dictionary that defines what is “green”. It’s a classification system that sets clear, science-based criteria for which investments, projects, and activities can genuinely be called sustainable. This is crucial because the lack of a common standard causes confusion and increases the risk of greenwashing.
This is very relevant for us as our economies in the region are resource-intensive and highly vulnerable to climate change. But public budgets alone cannot finance our transition to a greener, more resilient model. We need private capital to flow into renewable energy, sustainable agriculture, better waste and water systems, and resilient infrastructure. But investors need clarity and credibility on this front, and that is what the green taxonomy provides. A green taxonomy actively guides the flow of capital toward projects that reduce emissions, improve resource efficiency, and strengthen resilience. This builds trust, whether it is government spending, private investments, or financial markets. So this is not just a technical tool. It’s a strong signal of where we want our economy to go—toward a future that is competitive, inclusive, sustainable, and contributes to the creation of long-lasting jobs for the population.
The World Bank has played a key role in getting us here through the “Developing Green Taxonomy in Armenia” project. Tell us a little about the process behind this and how this aligns with Armenia’s broader economic development goals.
— The World Bank’s support for Armenia’s Green Taxonomy began in 2023 at the request of the Government and particularly the Central Bank of Armenia. Commercial banks had already started to issue financial products packaged as ‘green’, and there was an urgent need for a credible, nationally-owned system that could clarify the criteria for this label and help avoid greenwashing.
The Ministry of Economy established an inter-ministerial working group, ensuring cross-government ownership from the very beginning. As a global knowledge Bank, we give importance to partnerships with academia. To bring in local expertise, we contracted the Acopian Center for the Environment at the American University of Armenia, which additionally mobilized a wide range of sectoral experts.
Over the past two years, we engaged in an arduous, inclusive, and highly consultative process with government agencies, technical specialists, and stakeholders across priority areas from the private sector, such as energy, water, agriculture, forestry, industry, mining, transport, waste, and urban development.
When the Ministry of Economy further developed the taxonomy into a normative legal act, preparing it as a government decree, it was posted on the Government’s e-draft portal, where there was active engagement from civil society organizations, experts, and individual citizens. Their comments and observations not only enriched the process but also signaled something bigger—that the public is in tune with this reform and is ready for its adoption.
The result is a robust, context-specific classification system that defines three types of projects—green, transitional, and enabling. This tiered approach recognizes that not every sector can leapfrog immediately, but all must move in the direction of greener, safer, and more sustainable practices.
We are also helping the government operationalize the taxonomy by building verification systems, training verifiers, strengthening reporting, and ensuring transparency. Armenia’s commitment to this agenda has been clearly articulated in the Government Program and Action Plan for 2021-2026, which emphasized the need to transition to a green and circular economy. The Green Taxonomy is the backbone of this transformation, highlighting that the vision for modernization is not separate from the green agenda—to be modern is to be green. We are seeking a future where every dram invested supports sustainable, inclusive, and competitive growth.
What kinds of changes can everyday citizens in Armenia expect from the adoption of the green taxonomy? How will it impact their lives?
— By setting clear criteria for what counts as green, the taxonomy helps direct financing and public support into areas that people interact with every day.
For households, this could mean easier access to affordable loans for energy-efficient home improvements, like insulation, solar panels, or switching to cleaner heating. Such actions would translate into lower utility bills. It also means better waste management services and improved air quality in urban areas, because the taxonomy directs resources toward cleaner municipal systems and greener public transport.
For farmers, sustainable agricultural practices are key. So, over time, we expect to see more support for things like efficient irrigation systems, reduced fertilizer and pesticide use, and soil and water conservation measures. That not only reduces environmental harm but can also improve productivity, incomes, and boost rural employment.
For workers and communities, we expect to see more investment in greener industries and technologies. That means safer jobs, reduced pollution in industrial regions, and a healthier environment overall. It also helps municipalities invest in energy-efficient buildings, better water systems, and cleaner transport, in other words, improvements people will directly experience in their daily lives.
How will the success of the taxonomy be measured?
— While it is great to have the taxonomy as a guiding document, the key metric of its success will be how widely it is actually used. In practice, that means tracking the number of financial institutions, commercial banks, and public agencies that voluntarily integrate the taxonomy into their investment, lending, or budgeting decisions. The more institutions apply it, the more Armenia will be able to channel finance into projects that are truly green and aligned with the country’s climate and development goals.
Success will also be reflected in the quality of investments it helps unlock—more energy-efficient housing, greater adoption of renewables, cleaner transport, greener agriculture, and more resilient infrastructure. Over time, as it becomes embedded in green bond frameworks, climate finance tracking systems, and investment planning, the taxonomy will serve as the backbone of Armenia’s sustainable finance architecture.
Thus, success will be measured not just by the adoption of the taxonomy itself, but by how deeply it shapes financial flows and decision-making across the economy, and by the tangible improvements this brings in resilience, efficiency, and sustainability.
Let’s look at two related topics that are of increasing importance in Armenia—circularity and biodiversity. How does the World Bank see these two topics in Armenia’s current context, and what considerations should be key in decision-makers’ minds?
— The World Bank promotes the circular economy because it is one of the most effective ways to reconcile growth with sustainability. The costs of transitioning to circularity are outweighed by the returns because circular models reduce waste, improve efficiency, and extend the life of materials, which translates into savings for households, businesses, and governments. The return on investment is not only financial; it comes through cleaner air, healthier ecosystems, and more resilient communities. This, in turn, positively affects private sector productivity.
However, according to our recent report, Squaring the Circle: Policies from Europe’s Circular Economy Transition, circularity does not just happen on its own. Without strong policy frameworks, the penetration of circular business models tends to plateau at around 8-10 percent. In other words, the private sector will experiment with circular approaches, but without supportive regulation and incentives, it will never scale across the economy.
That is why we welcome Armenia’s commitment, under the 2021–2026 Government Action Plan, to adopt Extended Producer Responsibility legislation (EPR). EPR is one of the proven policy levers that drives circularity because it shifts part of the responsibility for waste management back to producers, creating real incentives for better product design, recycling, and reuse. Once adopted and implemented effectively, it will be a major step forward.
Biodiversity is a big topic for Armenia today. In 2026, the country will host its biggest international event ever, with more than 25,000 delegates expected to arrive for COP17. How would you illustrate to decision makers and even average citizens that these topics—circularity, biodiversity, and the green taxonomy—are all interrelated, positive contributors to our country’s sustainable economic growth?
— Take the example of the Armash wetlands in the Ararat Plain. It’s become a growing destination for birdwatchers because of its unique marsh and pond ecosystem. Every year, large numbers of migratory birds stop there as they travel through the region—flamingos, pelicans, herons, ducks, and many others that you wouldn’t expect to see in a landlocked country like Armenia. It shows how, with the right protection and management, even our most resource-constrained landscapes can become places of biodiversity, tourism, and economic opportunity. While we lack robust statistical data in terms of numbers, we see that there has been a significant increase in birdwatching tourists in recent years. And birdwatchers are qualitatively a different kind of tourist—for the most part, they are environmentally aware, so they do not negatively impact their surroundings, and, on average, they are considered a mid-to higher-tier spending tourist. This means an additional source of income for local communities. There is an interesting geography of birdwatching tourists who visit Armenia from a range of countries like Japan, the UK, and the US! Strategic decisions on building a green economy also open the door to new opportunities in tourism, generating new types of jobs.
Armenia can position itself as a destination for sustainable tourism—the kind that values our landscapes, biodiversity, and cultural heritage. The goal is not only to bring in more visitors, but to ensure that their experience is meaningful, that it creates lasting benefits for local communities, and that it helps preserve the environment. Managed this way, tourism becomes both a driver of economic growth and a partner in protecting the very nature that makes Armenia unique.
On all these topics, there is one cross-cutting key message that everyone should grasp—strong top-down initiatives like the green taxonomy and extended producer responsibility are crucial to get circularity and sustainability on the right trajectory. But at the same time, they cannot succeed without bottom-up engagement—citizens, communities, businesses, and especially young people must make it part of daily life. Policy sets the rules, but people make it real.
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