State Bank of Pakistan (SBP) Governor Jameel Ahmad has called for significantly increased financial support for projects that build climate resilience and support environmentally sustainable growth in Pakistan. At the “Enabling Green Financing and Green Bonds via Credit Enhancement Solutions” event, organized by InfraZamin Pakistan, Ahmad emphasized the crucial role of the financial sector in advancing climate-related projects aligned with both national and global sustainability commitments.
Governor Ahmad highlighted the dual urgency of addressing Pakistan’s vulnerability to climate change and fostering a financial ecosystem that supports sustainable development. Speaking on Pakistan’s specific climate challenges, he reminded attendees of the economic devastation from recent natural disasters, notably the severe 2022 floods, which inflicted losses estimated at $30 billion. Such events underscore the need for strategic climate financing, not only to mitigate potential future losses but also to prepare Pakistan for a resilient and sustainable economic future.
Reaffirming Pakistan’s pledge under the Paris Agreement, Ahmad reiterated the country’s goal to reduce greenhouse gas emissions by 15% by 2030, with a further 35% reduction conditional on securing external funding. In line with this goal, Pakistan also aims to generate 60% of its energy from renewable sources. However, to achieve these ambitious targets, the Governor emphasized the importance of channeling more credit toward climate-resilient and green projects.
Despite the macroeconomic pressures facing Pakistan, Governor Ahmad pointed out the SBP’s proactive role in promoting green financing. SBP has introduced several refinancing schemes aimed at renewable energy, with financing commitments reaching Rs. 94.7 billion by the end of June 2024. These funds have supported over 4,500 renewable energy projects across the country, resulting in a combined generation capacity of approximately 2,061 MW. Additionally, SBP has issued comprehensive Green Banking Guidelines, encouraging regulated entities to recognize and mitigate environmental risks associated with their operations.
To further bolster Pakistan’s green financing framework, the SBP, in collaboration with the World Bank, is working on a “Green Taxonomy.” This standardized classification system will identify and categorize green and transitional activities, making it easier for capital to flow into sustainable projects and ensuring uniformity in recognizing environmentally beneficial investments. Ahmad underscored the significance of this taxonomy as a cornerstone for future investment in Pakistan’s green economy, offering a clear framework for directing funds to qualified projects and activities.
Ahmad also highlighted that climate change risk is now a core theme in the SBP’s Strategic Plan 2023-28. The plan sets forth initiatives for sustainable growth over the next five years, aligning climate-focused goals with other essential themes, such as technological innovation, diversity and inclusion, productivity, and competitiveness. According to Ahmad, these elements will work together to create a resilient, diversified economy capable of addressing climate and economic challenges simultaneously.
The event also featured key industry leaders, including Philip Skinner, Head of Middle East, North Africa, and Pakistan at GuarantCo, and Maheen Rahman, CEO of InfraZamin Pakistan. Both speakers echoed Ahmad’s sentiments, highlighting the importance of collaborative financial mechanisms to achieve sustainable growth. Muneer Kamal, CEO and Secretary General of the Pakistan Banks’ Association, also addressed the role of the banking industry in supporting these initiatives.
Governor Ahmad’s remarks reflect an increasing focus on aligning Pakistan’s financial system with sustainable development goals. By emphasizing green financing, Pakistan’s central bank aims to mobilize resources and foster partnerships that can address climate vulnerabilities, drive sustainable economic growth, and help the country meet its international environmental obligations.