Banks ignore climate in project financing
KARACHI: Pakistan’s major commercial banks have made limited progress in extending sustainability commitments to the businesses and projects they finance, with climate change and biodiversity emerging as the weakest areas in a new assessment of the sector. The 2025 Benchmark of Bank Sustainability Policies in Pakistan, released by Fair Finance Pakistan (FFP) on the sidelines of the World Bank-IMF…
KARACHI – Seven major banks in Pakistan have only partially incorporated environmental considerations into their project financing decisions, a new assessment reveals. The 2025 Benchmark of Bank Sustainability Policies in Pakistan, released by Fair Finance Pakistan, found that climate change and biodiversity were the weakest areas, with just 13.8% and 26.8% of policies covering these issues, respectively.
Conducted in collaboration with Lahore University of Management Sciences and Profundo, the evaluation of Habib Bank Ltd, United Bank Ltd, MCB Bank, the National Bank of Pakistan, Meezan Bank, Allied Bank, and Standard Chartered Pakistan showed that 75.4% of policies relating to the banks' own operations scored positively, compared to only 23.1% for the companies and projects they finance.
Standard Chartered Pakistan and Allied Bank led the climate change scores, while MCB Bank and the National Bank of Pakistan received no points for biodiversity. The assessment recommends stronger borrower obligations, independent monitoring, and consistent environmental and social safeguards in credit appraisal to address the concerning gaps in climate and nature-related risk reflection in financing decisions.
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