Faiza Tehseen

The collaboration among Pakistan’s private sector, international investors, and friendly countries, particularly China, is key to synchronising capital across multiple green domains.

“Pakistan’s first climate budget for the fiscal year 2025-26, under which 30% of all public development projects will undergo a climate public investment management assessment (CPIMA), marks a significant shift to integrate climate considerations into national economic planning,”  noted Abid Qaiyum Suleri, Executive Director of Sustainable Development Policy Institute (SDPI).

Talking to WealthPK, he said that aligning fiscal strategies with climate resilience is necessary to achieve sustainability goals. “Pakistan is facing multifaceted challenges, including vulnerability to climatic risks, which affect agriculture, exacerbating water scarcity due to India’s suspension of Indus Water treaty, and constraints imposed by the IMF’s austerity programme.”

Suleri said: “Sustainability goals are often neglected in Pakistan’s economic policy. A multi-sectoral approach is needed to effectively manage the transition. The use of green bonds and performance-based incentives is important to finance climate initiatives. We should also shift from reactive subsidies to proactive investments.”

He said that such economic policies are direly needed that prioritise long-term sustainability over short-term stabilisation. “To promote energy efficiency and reduce dependence on fossil fuels, the second-hand automobile market can accelerate the adoption of hybrid and electric vehicles.”

He said: “Pakistan cannot circumvent the impacts of climate change, which could force the country to spend 9% of its GDP on resilience efforts. Advocacy for implementation of carbon taxes is a must to ensure that revenues collected are invested in climate resilience initiatives.”

The SDPI executive director said that usually, petroleum levies directly impact the poor. “There is a dire need for equitable fiscal policies that do not disproportionately affect vulnerable populations.”  

Emphasising the importance of aligning fiscal policies with climate objectives, Suleri said that about 20% of public sector investment should be dedicated to climate supporting and climate resilient projects.

Muhammad Saleem, Deputy Director of Communications, Ministry of Climate Change and Environmental Coordination, highlighted the need for tripartite push to integrate capital for Pakistan’s green goals. He said: “As Pakistan continues to strive to meet its climate adaptation and mitigation targets by 2030, estimated to require up to $348 billion, there is a pressing need for a tripartite push that integrates international climate finance, domestic financial institutions and government policy into a unified green investment strategy.”

He said that despite notable initiatives, green projects across the country continue to face significant challenges in attracting the right channels of investment.

Saleem said: “A promising solution can be the Green Impact Fund by Karandaaz, which facilitates the poor’s access to digital financial services. The fund is designed to support micro and small enterprises with a focus on climate-friendly operations. It offers a mix of equity financing, first-loss guarantees and occasional loans to encourage private sector participation in sustainable development.”

Talking to WealthPK, Saleem said that such fragmented efforts must now be integrated into a broader, cohesive framework that involves all key institutions. “Without alignment and coordination, the scale of climate financing needed will remain an unattainable goal.”

The ministry official said: “The government is seen as a key enabler in this scenario. A robust national carbon policy could offer a viable, critical platform for the trading of carbon credits, helping to position Pakistan as a low-carbon economy while contributing to its environmental sustainability commitments.”

He said to further accelerate this agenda, a tripartite Memorandum of Understanding was recently signed by JS Bank, the Export-Import (EXIM) Bank of Pakistan and the Climate Resource Coordination Cell (CRCC). “This collaboration aims to develop a national programme to “green” Pakistan’s exports, positioning the country as a future hub for environmentally responsible trade. The programme is expected to open new doors for global climate finance and elevate Pakistan’s standing in international markets.”

“As stakeholders continue to explore financing avenues, the need for coordinated action across public, private and financial sectors has never been more urgent. Undoubtedly, mobilising climate capital at scale is not possible without strategic partnerships, policy support and an unwavering focus on long-term sustainability,” Saleem emphasised.

“Therefore, it is crucial for stakeholders to realise that only through collaborative, tripartite coordination can Pakistan bridge its climate finance gap and unlock a greener, more resilient future,” added the official.

Credit: INP-WealthPk