Implementation of Green Financing Mechanisms in Pakistan

Implementation of Green Financing Mechanisms in Pakistan

Timeline: June-December 2022

Donor: Pakistan-German Climate and Energy Initiative, coordinated by GIZ

Background

On a global scale, green finance is changing the dynamics between two of the greatest challenges of our time: achieving economic growth and saving the planet. It is opening a path to facilitate and prioritize businesses that comply with climate and environmental objectives. Consequently, the green finance market is evolving rapidly and had already reached $540 billion by the end of 2021.

Considering the increasing severity of energy and environmental issues in the context of Pakistan, green finance presents an important opportunity to achieve the country’s Nationally Determined Contributions (NDCs) and brings about a clean energy transition and a significant positive change. To this end, a comprehensive strategy for green financing is required, particularly to analyse the role of finance industry in achieving green growth and to provide a pathway for governments to devise plans and policies that prioritize green, sustainable, and inclusive development. This is essential to scale investments into renewables and energy efficiency, as well as environmental rehabilitation and protection. To tap national and international green funds, multiple challenges at the policy and finance industry level have to be tackled.  Risks and opportunities should be better understood and addressed to leverage the full potential of financing a green economic transition in Pakistan.

To this end, in collaboration with the Pakistan-German Climate and Energy Initiative, the project will seek to gather and transmit knowledge from local and international experts and sources that are essential to support the uptake and development of green finance in Pakistan. This will be achieved through a capacity building workshop and training programme to help reinforce stakeholders’ capacities in accessing green finance within the framework of transformative projects and programmes on the just energy transition.

Objectives

The project has been initiated to address the following objectives:

To enhance knowledge and understanding on the prospects of green finance in Pakistan, by analysing the major challenges and limitations associated with the implementation of green financing mechanisms and identifying potential strategies to address them.
To identify national and international financing facilities, instruments, and policies that can facilitate and increase green investments in Pakistan in the near and medium terms.
To build local capacity on the implementation of green financing tools and instruments through workshops and hands-on training.
To analyse and define the way forward for Pakistan along with the role of different financing and development institutions. 

Research Outcomes

The workshop and training program will address the following key objectives:

1. To enhance understanding about the green finance landscape in Pakistan
2. To analyse major challenges and limitations in implementing green financing strategies in Pakistan and to provide feedback / report on solutions e.g. incorporating latest green financing practices in Pakistan.
3. To introduce the most recent green financing facilities, instruments and mechanisms on international, EU and German level which could potentially also support Pakistan in the near and medium term
4. To build capacity to implement the Green Banking Guidelines provided by the State Bank of Pakistan.
5. To develop understanding of "Green Financing Mechanisms" and perform hands-on training. The information gathered during training will be adopted as a potential solution for increasing Green Investments in Pakistan with special focus on the green financing guidelines of the SBP.
6. To analyse the way forward for Pakistan using green financing strategies, and the role of different financing institutions.

Recording links

Capacity Building: https://www.youtube.com/watch?v=QVe0ZMnEgXc

Hands-on Training: https://www.youtube.com/watch?v=mzkYORuPA-g