Page 46 - CMA Journal (Nov-Dec 2025)

Focus Section

Policy Coherence, Fiscal Instability, and Lack operational. In an effort to fill this gap and to shift the
of Private Sector Contribution focus of policy articulation and continued climate
change, it is important to note that the following
Climate finance requires long-term policy stability that is
institutional reforms are required for immediate
lacking in Pakistan's unstable political economy.
adoption in Pakistan:
• Unpredictable Policy Signals: A high turnover of
 Centralized Authority: One entity that has the
regulatory reversals, including sudden changes to
enforcement capacity to combine NCFS goals and
renewable energy tariffs or EV component import
PGT qualifications across all concerned ministries,
quotas, contradicts the purpose of the Green/Amber
the State Bank, and provincial governments.
categories of the PGT and the NCFS's mobilization of
private capital. It has also eroded investor  Fiscal Integration: Requirement of PC-1 and Public
confidence, making regulatory risk higher than the Sector Development Program (PSDP) appraisal
climate opportunity. systems to have DNSH, emissions thresholds, and
green impact indicators as hard requirements.
• Absence of Incentives: Although the private sector
is showing interest in making PGT-aligned  Incentives: Implement short-term, physical rewards,
investments, it complains that the government is not e.g., tax credits, concessional lines of credit, and
providing any tangible support. More importantly, preferential government procurement of
No Rewards to Compliance- no major tax breaks, investments that meet verifiable PGT-compatible
special offerings of lines of credit, or blended-finance status.
packages to go hand in hand with PGT alignment.
 Capacity Building: Establish specific technical units
This has created a high technical barrier and a low
within provincial planning departments and train
financial incentive, threatening to keep the green
municipal authorities to incorporate PGT tools into
transition an elite project rather than an
district-level planning and to conduct proper project
economy-wide change. The investors fear that the
screening.
green label is cosmetic, lacking firm verification and
effective regulators. This alienation threatens to turn  Credibility of Data: Complete operationalization of
the green transition into an elite, business-level the National Climate Finance Portal by providing
6
effort- and not an economy-wide one . transaction-level, verifiable disclosure systems and
developing a procedure on how to accredit the
The operational discrepancy between the strategic
third-party verifiers and auditors to enhance the
objectives of the NCFS and the technical needs of the
credibility of green-labelling and reduce market
PGT can be summarized in the table below, which
illustrates the specific institutional voids to be bridged 5,6. doubts about greenwashing.
Reference:
NCFS Strategic Goal
Scaling Investments (Innovative [1]. MOCC. Gov.Pk (2025). https://mocc.gov.pk/NewsDetail/OTll
Instruments) Policy Outcome/Risk NzdmOWMtMDA1Ni00Mjk0LWIwYWItODA2MTU2NDkxYjkz
Strengthening Governance Greenwashing risk; investor [2]. Germanwatch. Climate Risk Index 2026: Who suffers most from extreme weather
(Coordination, Portal) Key Institutional and paralysis; over-reliance on
Enhancing Sectoral Resilience (NDCs) Operational Gap Amber (Transition) projects. events? Weather-related loss events in 2023 and 1993–2023. Bonn: Germanwatch
Inconsistent Policy Signals and
M&E and Transparency Implementation vacuum; e.V.; 2025. https://www.germanwatch.org/sites/default/files/2025-11/
a lack of immediate financial slow project approvals;
rewards for PGT adherence. CRI%2026%20full%20report.pdf
regulatory overlap between
Fragmentation and Federal- SBP and provincial EPAs. [3]. National Climate Finance Strategy of Pakistan- 2024 https://mocc.gov.pk/
Provincial Disconnect.
Weak, non-compliant project SiteImage/Misc/files/NCFS.pdf
Capacity Deficit in district proposals; DDB financing is
planning, green engineering, constrained; inability to [4]. Pakistan Green Taxonomy 2025 https://mocc.gov.pk/SiteImage/Misc/files/Draft_
PGT Operational Necessity and environmental accounting.
Market Confidence & Regulatory Data Deficiencies: Existing effectively track Pakistan_Green_Taxonomy_Feb2025.pdf
Environmental Outcomes.
Stability (Green/ Amber Classifications) C-PIMA and public sector Neutralization of NCFS's [5]. Salik, M. A. N. (2025, March 24). Pakistan’s National Green Taxonomy: Framework
Uniform Application of SC & DNSH monitoring lack the necessary positive impact; high and integration (N. Nigar, Ed.). Institute of Strategic Studies, Islamabad.
(Enforcement Power) rigor and completeness for perceived risk; failure to
Local-Level Technical Capacity investor verification. meet NDCs on an auditable https://issi.org.pk/wp-content/uploads/2025/03/IB_Salik_March_24_2025.pdf
(Screening & Reporting) basis. [6]. Majeed, Z. (2022). Climate finance: Challenges, opportunities, and way forward
Credible, Real-time Data (Transaction- for Pakistan (MPhil thesis, Pakistan Institute of Development Economics).
level visibility)
https://file-thesis.pide.org.pk/pdf/mphil-environmental-economics-2019-zahid-maje
Figure 2: Analytical Framework of NCFS-PGT Misalignment and Policy Risk ed--climate-finance-challenges-opportunities-and-way-forward-for-pakistan.pdf
[7]. BR Research. (2025, March 6). Pakistan green taxonomy: A game changer or just
4. Recommendations greenwashing? Business Recorder. https://www.brecorder.com/news/40351539
Figure source:
The National Climate Finance Strategy and Green Figure 1: [2]
Figure 2 [Author]
Taxonomy of Pakistan can be considered as a sound
foundation for climate finance and development. The About the Author: Dr. Azeema Begum holds a PhD in Economics
structures are not necessarily flawed, but are designed as and has authored over 23 published articles and presented more
than 15 research papers at international and national conferences.
whole systems facing a sequence of crucial governance
With eight years of diverse research experience across multiple
and capacity challenges. The correspondence between organizations, she currently serves as Assistant Manager, Research
NCFS and PGT is at present only aspirational rather than and Publication, at Saviours.
44 ICMA’s Chartered Management Accountant, Nov-Dec 2025