Page 24 - CMA Journal (Nov-Dec 2025)

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In order to create carbon pricing tools and a measurement, Institutional Roles and Governance
reporting and verification (MRV) system, the Ministry of Mechanisms
Climate Change and Environmental Coordination (MoCC &
EC) began technical studies in 2024 with assistance from the Healthy coordination, an uncluttered governance system
World Bank’s Partnership for Market Implementation (PMI) and an interconnected vision within the institutions are
program (MoCC & EC, 2024). In order to guarantee that sold essential for Pakistan’s Green Taxonomy and carbon market
credits come from verified, sustainable activities like attentiveness and the style must be promulgated positively.
renewable energy, afforestation and energy efficiency
By incorporating the taxonomy into the financial sector’s
initiatives, Pakistan’s strategy places a strong emphasis on risk management, investment screening and green
an integrity-focused carbon market mechanism with the financing rules, the State Bank of Pakistan plays a crucial role
National Green Taxonomy. in ensuring that banks and DFIs direct credit towards
sustainable sectors (SBP, 2024). In order to facilitate
In addition to bolstering Pakistan’s climate governance, the
taxonomy-aligned investments, the Securities Exchange
creation of a local carbon market will create new avenues for
Commission of Pakistan is responsible for integrating
green investment, international credit trading and private environmental, social and governance disclosure criteria
sector involvement in emission reduction. According to into corporate reporting frameworks (SECP, 2024).
Article 6 of the Paris Agreement, if Pakistan wants to become
a carbon-free or even low-carbon economy, then it is In order to guarantee integrity and adherence to
international standards, the Ministry of Climate Change and
essential to put serious attention on a sustainable shift
Environmental Coordination is responsible for overseeing
which will only be possible by making robust decisions at the governance of the carbon market and providing the
the strategic level.
national policy framework. Establishing a Measurement,
Reporting and Verification system for carbon emissions and
Linking Green Taxonomy and green funding requires coordination between these
Carbon Market Readiness organizations (MoCC & EC, 2025). Moreover, encouraging
innovation, the adaptation of green technologies and
The strategic convergence of climate governance and creation of regional carbon projects depend heavily on the
sustainable finance is exemplified by the integration of involvement of the business sectors and academic
Pakistan’s National Green Taxonomy (NGT) with its framework cooperation. International partners including the World
for carbon market preparation. In order to ensure that Bank and UNDP continue to support regular alignment,
institutional capacity building and preparedness for global
investment and financial flows are focused on low carbon and
carbon credit markets (UNDP, 2025).
climate resilient initiatives, the NGT offers a classification
system for ecologically-friendly economic activities. Consequently, to guarantee Pakistan’s seamless transition to
Concurrently, these initiatives can provide a demonstrable a sustainable, low carbon financial ecosystem, a clearly
reduction in emissions that can be sold for carbon credits defined governance structure supported by interagency
cooperation, policy consistency and reliable data systems is
thanks to the carbon market framework (SBP, 2024).
still crucial.
This congruence guarantees that green-labeled activities Challenges and Opportunities
under the taxonomy like waste management, sustainable
agriculture and renewable energy can also be eligible to in Implementation
participate in voluntary or compliance carbon markets. To
Notwithstanding a number of institutional, technological
ensure openness and integrity, the State Bank of Pakistan is
and market-based obstacles, Pakistan’s National Green
working with the Ministry of Climate Change and Taxonomy and carbon market framework implementation
Environmental Coordination to establish a mechanism for offers substantial long-term prospects for sustainable
green financing verification and carbon accounting growth. Accurately classifying and tracking green
protocols (MoCC & EC, 2024). By reducing risks and boosting investments is hampered by the scarcity of trustworthy
the legitimacy of green initiatives, such coherence not only environmental data (SBP, 2024). Additionally, the absence of
draws in foreign climate money but also encourages private MRV (Measuring, Reporting and Verification) infrastructure
sector involvement. undermines the credibility of emission reduction claims and
regulatory overlaps between financial and environmental
Furthermore, integrating the NGT with carbon market institutions may cause uncertainty in compliance
mechanisms increases Pakistan’s capacity to meet its procedures (MoCC & EC, 2025).
Nationally Determined Contributions (NDCs) under the Paris
Operationalization is further deferred by capacity
Agreement. It ensures that both policy instruments, finance constraints among corporations and financial institutions,
and carbon pricing, mutually reinforce each other, resulting especially in ESG reporting, corporate accounting and green
in measurable emission reductions and resilient economic project review (SECP, 2024). Besides, there are fewer
growth. In order to mobilize sustainable finance, promote incentives for private sector involvement because market
innovation and develop a low carbon inclusive economy in liquidity and the pricing mechanism for carbon credits are
Pakistan, taxonomy-based classification and carbon trading still being developed. But these obstacles also provide
must work together. excellent possibilities.

ICMA’s Chartered Management Accountant, Nov-Dec 2025