Page 90 - CMA Journal (Nov-Dec 2025)

SECTOR BRIEF

S B

Green Banking in Pakistan

By: ICMA Research and Publications Department

Green banking refers to the integration of Environmental mounting risks of poverty escalation and GDP losses, the
Sustainability into banking operations, products, and expansion of green banking is now a strategic necessity
lending decisions, enabling financial institutions to rather than a discretionary policy choice.
reduce their carbon footprint while financing
climate-friendly and resilient economic activities. As 1 Capitalization Green
Government Bank
Pakistan ranks 15 on the Climate Change Performance
th
2 Innovative financing
Index (CCPI), with very high ratings in GHG emissions and structures
Creation & 3 Private investment flows
energy use, but low performance in climate policy and Public 1
very low penetration of renewable energy. The country Capitalization Risk
stands at a critical juncture where climate finance has Mitigation
Green Bank Private Investors
become central to its sustainable development and
resilience agenda. Despite this urgency, Green Banking in 2 Private 3
Pakistan is in its evolutionary phase, with the debt Public Payback Investment Payback
Investment
market gradually internalizing environmental risks in Consumer Savings, Job Creation,
bank financing. While the Equity Market continues to lag Low Carbon Projects Taxpayers Protected, GHG
Reductions
due to limited investor awareness and the absence of
sustainability pricing in banking stocks. Given Pakistan’s GREEN BANK STRUCTURE
high vulnerability to climate-induced disasters and the
s
g
t
Tracing Pakistan’s Transition from Traditional Bankking to Greeen Banking Practices
2013 Climate Change Vulnerability Massive floods of 2010 highlighted Pakistan’s climate vuulnerability, emphhasizing the needd for
e
a
Recogniized sustainable business and b b with SECP issuing voluntary CSR guiidelines.
2015 e egulatory Alignment SBP joined IFC’s Sustainable Banking Netwoo e
b
e
2016 Renewable Energy Financing Launch of SBP’s Renewable Energy Financing Scheme with 717 projects (1,0082 MW) financed and
c
b
a
Began subsidized lending for more renewable proj jects.
2017 Green Banking Framework SBP issued Green Banking Guidelines covvering environmental risk management, green busiiness
B
n
u
r
Formalized on, and impact re
2018 Early Bank-Level Green JS Bank accredited by GCF with im r-powered brancches, energy-efficcient
a
y
o o infrastruucture, ESG creditt mmart Roshni and Ghar Apna Solar Financing, sponssored
WWF Gr r h hallenge and plantted 20,000 trees.
2019 Building Regulatory & Industry  SECP issued Green Bond Guidelines.
B
g
Momentum  SBP planted 73,417 ttrees.
n
 Khushhali Microfinance Bank planted 6,000 trees.
 Bank Alfalah developed Environment && Social Managemment System.
p
 Bank Islami launchedd ‘One-Touch’ Bannking.
 Haabib Bank introducced paperless credd nns.
2021 Green Financing Instruments  WAPDA issued USD 500 million green Eurobond for dams.
e
F
c
Introduced  SECP provided greenn bond issuance frramework.
2022 Capacity Building & ESG  SBP strengthened banks’ ESG capaccity through the ESRM manual, climate risk guidelines,
b
y
Integra on traaining programs, a ppartnerships.
 Task Force on Climate-related Financiaal Disclosures (TDCC aakistan remains largely
t
s
d
voluntary, supported by capacity-buildding workshops & agement.
2023 Strategic Planning & Global SBP refined guidelines, fin n reen Taxonomy, ali with global standards,
n
Alignmeent and announced its strategic plan “SBP Vision 2028.”
g
2025 Sovereign & System-wide  SBP directed banks to adopt “Pakistaan Green Taxonommy” and align poliicies with the na onal
g
Green B B climmate framework.
 First rupee-denominated green bonnd of Rs. 1 billioon and inaugural Green Sukuk wworth
r
Rs. 30 billion issued.
 Sovereign sustainable finance framewwork launched withh aa rrated
“Exxcellent” by Sustainable Fitch.
 79% of banks adopted green policies aand 69% integrateed E&S risk in lending.
e
88 ICMA’s Chartered Management Accountant, Nov-Dec 2025