UK climate study to accelerate green finance in Pakistan

ISLAMABAD: British High Commissioner Jane Marriott CMG OBE launched a landmark study to identify and prioritise critical initiatives to mobilise private sector climate financing in Pakistan.

The study’s climate finance analysis includes several ‘roadmaps to action’ to support the Government of Pakistan’s ambitions for climate mitigation, adaptation and resilience, the state news agency reported.

The study will help to inform the next generation of UK support to deliver the country’s climate investment ambition.

The event was held on Monday on ‘Accelerating Green and Climate Resilient Financing in Pakistan’, was co-chaired with Federal Minister for Climate Change Ahmed Irfan Aslam.

The study, implemented through the Boston Consulting Group (BCG), is part of the UK Government’s ‘Centres of Expertise’ initiative by the Growth Gateway Programme.

The High Commissioner announced three new UK-supported initiatives, a new partnership with Government of Pakistan to quantify the cost of inaction under the Growth Gateway programme–an important step for Pakistan to develop a robust adaptation and resilience financing strategy.

FCDO’s REMIT programme will support the Government of Pakistan with streamlining institutional governance for climate finance. REMIT will also support the development of a national green taxonomy to classify climate investments, through a partnership between the World Bank Group and the State Bank of Pakistan. Jane Marriott said,

“There is no bigger global challenge than tacking climate change, which Pakistan is suffering the impacts of more than most countries.

This new UK-supported analysis is part of our wider climate finance and governance support in Pakistan. By identifying and prioritising the most critical climate finance initiatives, we are laying the foundations for climate finance mobilisation at scale into some of the most important low-carbon and adaptation projects in Pakistan.”

“Today’s discussion amongst government, private sector and development finance leaders is an important step for harnessing the potential of the private sector to help Pakistan mitigate, and respond to future climate shocks.”

Minister for Climate Change and Environmental Coordination Ahmad Irfan Aslam said, “The UK government study which has been launched today fills a critical knowledge gap.

It identifies which initiatives are required for Pakistan to mobilise more and better climate finance, especially by the private sector.

The Government of Pakistan looks forward to collaborating on new areas of support announced by the UK today to take forward several of the key initiatives identified – putting this report into immediate action.”

Charmian Caines, Senior Partner at Boston Consulting Group (BCG) said, “We at the Growth Gateway Programme have been delighted to support UK and Pakistan in their partnership to bridge Pakistan’s climate financing gaps as it addresses its pressing vulnerability to extreme climate shocks. Our collaboration has identified key enablers to unlock bankable opportunities, priority adaptation and resilience (A&R) projects as well as initiatives to share the pressure of disaster risk financing on government budgets with the private sector.”

CEO of Adam Smith International (ASI) Jalpa Patel said, “Climate finance and green investments are critical for Pakistan’s future. Adam Smith International is excited to help deliver on the UK’s climate commitments by providing vital technical support on climate financing to the Government of Pakistan through the FCDO-funded REMIT programme to help the government design policy, regulation, and financial instruments for capital markets to catalyse international climate finance.”

In attendance was the Finance Minister, Dr Shamshad Akhtar, Senator Sherry Rehman, Special Assistant to the Prime Minister on Government Effectiveness / Deputy Chairman Planning Commission, Jehanzeb Khan, and other leading climate finance experts.

A recent study by the World Bank assessed it will take $348 billion to adapt to climate challenges, and transition to a low carbon economy. Current financing in Pakistan is insufficient with limited private sector participation and the allocation of funds disproportionately towards mitigation rather than adaptation and resilience.

The report highlighted that an important and necessary step is to calculate the ‘cost of inaction’ on Adaptation and Resilience (A&R) priorities and the impact that this would have on the lives of ordinary Pakistanis, the natural environment and the economy.

A&R projects are often seen as ‘unbankable’, and so it is important to consider the return on investment differently. Once that ‘cost of inaction’ gap becomes clear, the return on financing A&R projects becomes visible.

The UK plans to support the study’s roadmap to quantity the ‘cost of inaction’ through the Growth Gateway programme, alongside providing wider support to climate governance and mobilisation through our UK toolkit – including to develop a green taxonomy through the UK’s REMIT programme (Revenue Mobilisation, Investment and Trade Programme).