State Bank of Pakistan (SBP) Governor Jameel Ahmad has called for a more inclusive approach to climate financing, urging financial institutions to give greater attention to women, smallholder farmers and small businesses that face significant exposure to climate-related risks but often have limited access to formal financial services. He said climate finance should not be restricted to funding environmentally sustainable investments but should also help vulnerable communities prepare for climate shocks, strengthen their financial resilience and adapt to changing environmental conditions.
The governor made these remarks while addressing the inauguration of a four-day joint learning programme organised by the State Bank of Pakistan and the Alliance for Financial Inclusion (AFI) in Islamabad. The programme brought together 38 participants representing central banks and financial regulators from 24 countries across four continents. Discussions are focused on the development and implementation of inclusive green finance policies, with participants expected to share experiences and examine practical approaches to making climate-related financial services more accessible.
Ahmad said climate change and financial exclusion were closely connected, particularly in countries where communities exposed to floods, extreme weather and other environmental disruptions often have limited access to banking and financing facilities. He emphasised that the people most affected by climate-related events should be included in financial policies designed to improve resilience. Women, smallholder farmers and small businesses are among the groups that can face difficulties securing formal financing despite being directly affected by climate risks.
The governor’s remarks highlight a broader challenge for financial institutions. Climate-related financing is often associated with renewable energy, environmentally sustainable infrastructure and other green investments. However, communities affected by changing weather patterns also need access to financial products that can help them recover from losses, maintain business operations and invest in more resilient agricultural and commercial activities. Ahmad’s position is that climate finance should address both environmental objectives and the financial needs of people whose livelihoods are exposed to these risks.
During his address, Ahmad referred to the devastating floods of 2022 as an example of the economic and social consequences of climate-related disasters in Pakistan. The floods caused nearly $15 billion in physical damage and an additional $15 billion in economic losses. More than 30 million people were affected, while approximately 2.2 million homes were damaged. The scale of the disaster demonstrated how climate shocks can affect households, businesses, agricultural activity and wider economic conditions.
The governor said such events underline the importance of building financial systems that are both environmentally sustainable and inclusive. Financial access can help individuals and businesses prepare for unexpected disruptions and manage the financial consequences of disasters. For farmers, this can include access to financing that supports climate-smart agricultural practices, while small businesses may require suitable credit facilities to maintain operations and recover after climate-related damage. Women also need financial products and services that improve their ability to manage household and business-related risks.
Ahmad shared updates on Pakistan’s financial inclusion progress, stating that the country’s financial inclusion rate had reached 71 percent, while the gender gap in financial inclusion had narrowed to 27 percent. These figures reflect progress in expanding access to financial services, although the governor’s emphasis on vulnerable groups indicates that further work is required to ensure financial access reaches communities facing environmental and economic challenges.
Pakistan is also sharing its Green Taxonomy and climate risk framework with regulators across the AFI network. The initiative provides an opportunity for other jurisdictions to examine Pakistan’s policy experience and consider how similar frameworks can be adapted to their own financial systems. The exchange is particularly relevant for regulators seeking to integrate environmental considerations into financial sector policies while maintaining access to financing for underserved communities.
The SBP has introduced several regulatory measures intended to encourage environmentally responsible banking and improve the management of climate-related financial risks. The framework includes Green Banking Guidelines issued in 2017 and the Environmental and Social Risk Management Framework introduced in 2022. These measures provide guidance for financial institutions on incorporating environmental and social considerations into their operations and financing activities.
The Pakistan Green Taxonomy is another important component of the country’s green finance framework. It classifies activities considered environmentally sustainable and can help financial institutions identify financing opportunities that support environmental objectives. Alongside the taxonomy, the SBP has introduced regulations addressing climate-related financial risks and Climate Stress Testing Guidelines, which were issued in December 2025.
Climate stress testing is intended to help financial institutions assess how environmental events and climate-related changes could affect their financial positions and operations. By examining potential risks, banks and other institutions can improve their understanding of vulnerabilities and prepare appropriate risk management measures. The broader regulatory approach seeks to make climate considerations part of financial sector planning rather than treating them as a separate environmental concern.
Ahmad also highlighted Pakistan’s efforts to strengthen women’s participation in the financial system. He referred to the Pakistan Women Inclusive Finance Program, which is supported by the Asian Development Bank, as part of the country’s work to improve access to financial services for women. Pakistan also joined the Women Entrepreneurs Finance Code in 2025, with the SBP serving as the financial industry’s anchor institution.
These initiatives are intended to improve the availability of financial services for women entrepreneurs and strengthen their ability to participate in economic activity. Access to suitable financial products can support business development and help women manage financial risks, including those associated with climate-related disruptions.
The SBP governor outlined Pakistan’s work under AFI’s four pillars of Promotion, Provision, Protection and Prevention. The approach connects policy development with practical measures to expand access to sustainable financial services and improve the ability of individuals and businesses to manage risks.
Under this framework, the Pakistan Green Taxonomy helps classify environmentally sustainable economic activities, while targeted financing schemes are designed to direct credit towards underserved groups. Women-focused initiatives aim to strengthen financial resilience and improve participation in the financial system. Meanwhile, climate risk regulations and stress testing are intended to help financial institutions prepare for potential disruptions and assess their exposure to environmental risks.
Participants attending the Islamabad programme are expected to exchange experiences on implementing green finance policies, supporting climate-smart agriculture and addressing barriers that can prevent vulnerable groups from accessing financial services. Gender-related challenges are also part of the discussions, reflecting the need to consider differences in financial access and climate exposure when designing inclusive financing policies.
Ahmad said the effectiveness of regulatory frameworks ultimately depends on their implementation and the impact they create in people’s lives. He thanked AFI for its partnership and expressed the expectation that the programme would strengthen professional networks and knowledge exchange among participating jurisdictions.
AFI Director of Strategy, Member Engagement and Evaluation Aban Haq and World Bank Operations Manager Lasse Melgaard also addressed the inaugural session. Both highlighted the importance of platforms that allow regulators and financial institutions to share knowledge and exchange practical experiences in inclusive and sustainable green finance.
Melgaard welcomed the collaboration between the SBP and AFI, noting the value of creating opportunities for member institutions to learn from one another’s implementation experiences. The joint learning programme is being hosted in Pakistan for the first time, bringing international regulators and central bank representatives together to discuss how inclusive green finance policies can be translated into practical measures.
The programme places Pakistan’s climate finance framework within a wider international discussion on sustainable financial systems. Its focus extends beyond the development of regulations to the challenges of applying them, particularly in reaching women, farmers and small businesses. For the SBP, the central objective is to ensure that climate financing supports environmental sustainability while also improving the ability of vulnerable communities to withstand economic and climate-related shocks.
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