Pakistan’s record breaking floods in 2011 and 2022 washed away any illusion that climate change is a distant threat. The economic cost of these disasters was around $58 billion, and even the IMF has tied new support to climate action. Clearly, climate change isn’t just an environmental issue, it’s a financial one. Are our banks prepared for this new reality?
Globally, over 130 major banks have pledged to align their portfolios with net-zero emissions by 2050. HSBC, for instance, aims to provide between $750 billion and $1 trillion in sustainable financing by 2030 as part of its climate strategy. France’s BNP Paribas has gone a step further, stopping financing the heavy carbon emitting sectors. These high-profile moves show banking giants pivoting towards greener investments. In practice, this means rethinking lending, more financing for renewable energy and cutting off loans to the worst polluters. These moves show a pivot toward greener investments and prove that banks can be powerful allies in fighting climate change.
Pakistan’s financial sector has only recently embarked on its own green banking journey, but early steps are promising. The State Bank issued Green Banking Guidelines in 2017, and since then regulators introduced an Environmental and Social Risk Management manual-2022 and a draft Green Taxonomy to define “green” investments. The impact is visible: now every bank has a sustainability officer and many have policies to manage environmental risk. Banks are finally considering climate and environmental factors before financing projects, a crucial shift in mindset.
Concrete initiatives are also being adopted. The SBP’s refinance scheme for renewable energy has lent about Rs95 billion, financing thousands of solar and wind installations that added roughly 2,000 MW of power. Pakistan also launched its first green sukuk, raising Rs30 billion for clean energy projects, a milestone in sustainable finance. Banks and insurers are rolling out products like micro-loans for electric bikes and crop insurance against extreme weather. Banks are also greening their own operations by going paperless, installing solar panels at branches, upgrading IT systems and nudging customers toward eco-friendly habits. These small steps set the tone that banking can be environmentally conscious too.
Crucially, the country’s top banks are making climate commitments. Habib Bank Limited, Pakistan’s largest bank, aims to make its operations net-zero by 2030. Askari Bank has launched a programme “Askari Ujala” offering subsidised loans for small businesses to invest in clean energy. Meanwhile, other major banks have set up sustainability units and rolled out green home loans, solar panel financing and similar products. These moves show that supporting climate-friendly projects is not just good PR, its good business.
Still, green finance remains only a tiny fraction of banking activity in Pakistan. The next step is to move from a few pilots to making sustainability central to strategy. Banks should broaden their green portfolios beyond a handful of renewable energy projects to a wider array of climate solutions across the economy. Such investments can lower default risks, boost economic stability, and even create new profit opportunities. At the same time, banks must get tougher on high-carbon projects. Climate-proofing their portfolios should be seen as a core duty, not just corporate social responsibility. It’s about survival and competitiveness in a warming world.
What does all this mean for you and your money? Climate change can affect the health of your bank. A bank heavily invested in climate-blind projects like luxury resorts on eroding coastlines or loans to polluting industries could be in trouble when disasters strike or regulations tighten. By contrast, a bank financing sustainable projects and managing climate risk is likely to be more resilient. So pay attention to your bank’s stance. Does it publish a sustainability report or disclose climate risks?
As consumers, we can help steer change. By choosing banks and financial products that are environmentally responsible, we send a signal that sustainability matters. Need a loan? Consider the green options many banks now offer, like low-interest financing for home solar panels or electric vehicles. These can save you money and encourage banks to expand their green offerings. Similarly, ask your bank if your deposits or investments are funding clean projects or polluters. Banks do care about customer sentiment, and with public pressure they’ll become more transparent and accountable.
Pakistan is on the frontlines of climate change, but it can also be at the forefront of climate solutions, and our banks have a pivotal role to play. The progress so far is encouraging. Yet, truly greening the sector will require more than scattered initiatives; it demands a fundamental shift in how finance works. This is about safeguarding our economy. “Climate-proofing” the financial system is an essential step.
We must hold our banks and ourselves accountable. Every rupee in our accounts is an investment in the future; it could fund a polluting plant or a wind farm. By banking on climate action, we protect not just the planet but also our own financial future in an age of climate uncertainty. It’s time to turn the tide, and everyone from CEOs to customers has a part to play. Let’s make sure our money works toward a greener, safer Pakistan. After all, a bank can’t thrive on a dying planet.
Dr khalid Shafi