In a call to action for the financial sector to embrace sustainability, the Governor of the State Bank of Pakistan (SBP), Jameel Ahmad, underscored the critical need to bolster credit allocation for climate-resilient projects and promote environmentally sustainable growth. Speaking at the event “Enabling Green Financing and Green Bonds via Credit Enhancement Solutions,” hosted by InfraZamin Pakistan, the Governor emphasized the growing importance of aligning Pakistan’s financial sector with global shifts toward sustainability.
“Leveraging the financial sector’s potential to align with sustainability is essential to fulfilling both national priorities and international commitments,” Ahmad remarked, stressing the need for decisive actions to enhance climate resilience amidst Pakistan’s increasing vulnerability to climate change. The Governor’s address, which highlighted the pressing urgency of tackling climate change, pointed to the devastating floods of 2022, which caused approximately $30 billion in economic losses.
Ahmad reaffirmed Pakistan’s dedication to the Paris Agreement, committing to reduce emissions by 15 percent by 2030, with a further 35 percent reduction contingent upon securing external financing. Additionally, Pakistan is set to generate 60 percent of its energy from renewable sources in the near future. Despite facing significant macroeconomic challenges, Mr. Ahmad cited the SBP’s continuous efforts in spearheading green financing, particularly in renewable energy. By June 2024, SBP’s refinancing schemes for renewable energy projects will have disbursed Rs. 94.7 billion, financing over 4,500 renewable energy initiatives with a cumulative capacity of 2,061 MW. The SBP has also introduced Green Banking Guidelines to assist regulated entities in recognizing and managing the environmental risks posed by their operations.
Further advancing its green agenda, SBP is working with the World Bank to develop a Green Taxonomy. This framework will standardize the classification of green and transitional activities, thus facilitating the flow of capital into environmentally sustainable projects. “This taxonomy will provide clarity in identifying and classifying green activities, ensuring greater alignment between capital flows and sustainable initiatives,” Mr. Ahmad explained.
The Governor also shared that climate change risk has become a key component of the SBP’s Strategic Plan for 2023-2028, ensuring that sustainability remains a core focus in the coming years. This plan integrates technological innovation, diversity and inclusion, and competitiveness as complementary goals for sustainable economic growth.
The event featured notable addresses from Mr. Philip Skinner, Head of Middle East, North Africa, and Pakistan at GuarantCo; Ms. Maheen Rahman, CEO of InfraZamin Pakistan; and Mr. Muneer Kamal, CEO and Secretary General of the Pakistan Banks’ Association. Together, the speakers underscored the need for integrated efforts across sectors to drive Pakistan’s green financing agenda forward, ensuring a more resilient and sustainable future.