ISLAMABAD: Pakistan will require an estimated $565.7 billion in investment by 2035 to meet its updated climate commitments under the Nationally Determined Contributions (NDC) 3.0, according to officials. The financing will be essential for reducing greenhouse gas emissions, expanding renewable energy, and strengthening climate resilience in one of the world’s most climate-vulnerable countries.
The figures were presented during a session hosted by the Overseas Investors Chamber of Commerce and Industry (OICCI). Discussions focused on the role of the Pakistan Green Taxonomy (PGT) and enhanced Environmental, Social, and Governance (ESG) disclosure frameworks in channeling domestic and foreign capital toward climate-aligned projects.
The session coincided with the Securities and Exchange Commission of Pakistan (SECP) aligning its revised ESG Disclosure Guidelines with the Pakistan Green Taxonomy. This alignment aims to improve sustainability reporting and investor transparency across listed companies.
Under NDC 3.0, Pakistan has committed to reducing greenhouse gas emissions by 17% unconditionally and 33% conditionally, increasing electric vehicle adoption by 30%, and transitioning to 60% renewable energy in its national energy mix. Achieving these ambitious targets will depend on access to green finance, concessional funding, and active private sector participation.
Introduced by the State Bank of Pakistan in 2024, the Pakistan Green Taxonomy provides a classification framework for economic activities that contribute to environmental objectives. These objectives include climate mitigation, sustainable water use, ecosystem protection, pollution control, circular economy practices, and land management. The taxonomy guides banks, investors, and corporates in aligning financing decisions with climate goals.
Alongside the taxonomy, the ESG Disclosure Guidelines provide standardized metrics for both financial and non-financial reporting. While voluntary at present, the framework is expected to transition to mandatory compliance between 2029 and 2031, increasing reporting requirements for listed companies and improving comparability for investors.
Experts noted that alignment with the green taxonomy and credible ESG reporting could enhance Pakistan’s access to international climate finance, reduce funding costs for compliant firms, and bolster investor confidence as global capital increasingly prioritizes sustainability. Technical discussions highlighted the importance of substantial contribution thresholds, do-no-significant-harm principles, minimum social safeguards, and reporting standards including GRI, ISSB, and TCFD.
For Pakistan’s capital markets and banking sector, the $565.7 billion figure reflects both a significant financing gap and a major investment opportunity. Climate-linked investment is increasingly seen as a driver of long-term economic growth, financial sector development, and sustainable corporate performance.
The integration of taxonomy-aligned financing and ESG reporting positions Pakistan to leverage global sustainable finance flows while advancing its climate and economic objectives over the next decade.
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