Page 71 - CMA Journal (Nov-Dec 2025)

Pakistan’s Green Shift:
Focus Section

ESG and Climate Action

With the lack of significance being given to climate and mainstreams social
the overall environment in Pakistan, it has led the inclusion and gender
government to focus on the environmental sector by responsiveness.
applying Environmental, Social, and Governance (ESG)
Pakistan also has
reforms. ESG has been introduced by the Securities and
energy and sectoral
Exchange Commission of Pakistan (SECP). ESG provides
goals related to
guidelines for listed companies to report on their
2030. These include
environmental, social, and governance performance.
increasing the share
These guidelines help companies disclose climate risks,
of renewable energy
social outcomes, and governance practices in a
in the energy mix,
structured format. The SECP released revised ESG
scaling up clean
disclosure guidelines aligned with Pakistan's green
energy technologies,
taxonomy in December 2025. This marks the beginning
expanding rene-
of Pakistan's “Green” economic activities, with the goal of
wable and clean Sajjad Usman, ACMA
improving sustainability and meeting national climate
energy capacity, Manager Compliance,
commitments. Currently, the ESG reforms are voluntary
promoting energy
and will become mandatory by mid-2029, allowing listed Arif Habib Dolmen REIT
efficiency, and
companies time to act on the reforms and make Management Limited
encouraging electric
necessary changes.
vehicle adoption
Forests and Climate Challenges along with other low-carbon transport solutions. The
main challenge in achieving these goals before 2030 is
There are many plans for the future of Pakistan's climate
the finance required. Achieving these mitigation and
endeavors. Currently, only 4.7% to 5% of Pakistan is
adaptation goals will require significant investment,
covered by forests, and coverage has declined over the
particularly for conditional targets that depend on
past few decades due to illegal logging for fuel and
international financial support. Pakistan’s NDC estimates
furniture, despite afforestation efforts like the Billion Tree
the need for hundreds of billions of dollars in climate
Tsunami. The country is forest-poor, losing thousands of
finance by 2035, with a large portion of this funding gap
hectares annually, with major losses concentrated in
applicable to the 2030 action plan.
areas like Khyber Pakhtunkhwa and the Federally
Administered Tribal Areas, worsening floods and water Mobilizing International Climate Finance
scarcity. With the current state of Pakistan's
Pakistan can address these financial challenges through
environmental management, it is encouraging to see the
mobilizing international climate finance, accessing
government's efforts for the betterment of the
global climate funds such as the Green Climate Fund
environment. Pakistan's updated NDC (3.0) has set a
(GCF), Adaptation Fund, and Global Environment Facility
target to reduce projected greenhouse gases by up to
(GEF). Pakistan could also leverage its high climate
50% of the “Business-as-usual” scenario by 2030. Of this
vulnerability (floods, heatwaves) to secure grants and
50% reduction target, 15% is planned to be achieved
concessional finance, not only loans. Other ways to
unconditionally using domestic resources and policies,
overcome the finance gap include expanding green
while the remaining 35% depends on securing
finance and green sukuk by issuing more green bonds
international climate finance, technology transfer, and
and green sukuk to fund renewable energy, water
capacity-building support from global partners.
management, and climate-resilient infrastructure. ESG
Adaptation and Energy Goals reforms can leverage Pakistan’s strong Islamic finance
sector to attract capital from Gulf countries and
Other plans in the NDC include Enhanced Adaptation ESG-focused investors, while aligning green sukuk with
Goals, integrating Pakistan's National Adaptation Plan Pakistan’s green taxonomy to ensure credibility and
(NAP) with priorities in water security, agriculture, investor confidence.
disaster risk reduction, and urban resilience. This strategy
emphasizes addressing climate vulnerability and
ICMA’s Chartered Management Accountant, Nov-Dec 2025 69