Chief Business Correspondent, Herald Star
As the climate crisis escalates globally, Pakistan—one of the most climate-vulnerable countries despite contributing less than 1% to global greenhouse gas emissions—stands at a critical juncture. The business sector, long viewed as a passive observer in environmental matters, is now increasingly seen as both a culprit and a potential catalyst for climate solutions. The question is no longer whether businesses should engage in climate action—but how deeply and authentically they are willing to do so.
Economic Realities Meet Environmental Urgency
In 2022, Pakistan suffered over $30 billion in damages due to catastrophic floods. The economic cost was massive, but the long-term impact on investor confidence, agricultural productivity, and public infrastructure was even more destabilizing. With a narrow fiscal space and mounting debt, the state alone cannot foot the bill for climate adaptation and resilience. This puts Pakistan’s private sector front and center in the climate conversation.
Yet, many of the largest corporations have been slow to integrate environmental, social, and governance (ESG) criteria into their business models. A recent survey by the Pakistan Business Council revealed that less than 15% of large firms have published a sustainability report in the past year. While CSR departments tout tree plantation drives and awareness campaigns, systemic climate risk—whether from disrupted supply chains, energy volatility, or regulatory shifts—remains poorly understood in corporate boardrooms.
A Missed Opportunity or an Emerging Market?
Climate change is not just a risk; it is a $23 trillion investment opportunity in emerging markets by 2030, according to the International Finance Corporation (IFC). Pakistan, with its untapped solar, wind, and hydropower resources, has immense potential to lead a green industrial transformation.
Major textile exporters such as Interloop and Artistic Milliners are now experimenting with renewable energy integration, water recycling systems, and net-zero targets—not simply as acts of goodwill but as compliance measures demanded by international buyers, particularly from the EU and North America. The EU’s upcoming Carbon Border Adjustment Mechanism (CBAM), which taxes imports based on their carbon content, is a warning shot to Pakistani exporters: adapt or lose market share.
Banks are slowly recognizing the opportunity too. The State Bank of Pakistan (SBP) has introduced a Green Banking framework, urging financial institutions to extend green credit lines and assess environmental risk in lending decisions. But green finance in Pakistan remains in its infancy—representing less than 2% of total lending portfolios.
The SME Dilemma: Big Impact, Little Support
While large firms may have the resources to pivot toward sustainability, the real struggle lies with Pakistan’s small and medium enterprises (SMEs), which constitute nearly 90% of the country’s businesses. Most lack the technical expertise, regulatory clarity, and financial instruments to decarbonize their operations.
Climate-related compliance is becoming an export requirement, especially in sectors like leather, sports goods, and agriculture. Without coordinated support—such as subsidies for green technology, capacity-building programs, and tax incentives—SMEs risk being left behind in the global green economy.
The upcoming Pakistan Climate Finance Strategy, currently under review at the Ministry of Finance and Ministry of Climate Change & Environmental Coordination, could offer a roadmap. However, for it to be effective, it must include targeted provisions for small businesses, including micro-loans for energy-efficient upgrades and capacity-building for climate risk assessment.
From Corporate Social Responsibility to Corporate Climate Strategy
Many businesses in Pakistan continue to treat climate action as a CSR activity rather than an operational imperative. This outdated approach has resulted in superficial efforts—greenwashing campaigns that offer little in terms of emissions reductions or climate resilience.
To shift from tokenism to transformation, firms need to internalize climate costs in their decision-making. This means carbon accounting, scenario planning for extreme weather events, and genuine engagement with global sustainability frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) or Science Based Targets initiative (SBTi).
The rise of sustainability-linked bonds and climate risk disclosures in global capital markets also means that investors are increasingly favoring companies that demonstrate real environmental stewardship. Pakistani corporates aiming to attract international financing or partnerships must align with these expectations.
Climate-Tech: A New Frontier for Innovation
Pakistan’s nascent startup ecosystem offers a glimmer of hope. Greenovation, a Lahore-based clean-tech startup, has developed AI-based energy audits for factories, while firms like PakVitae are creating sustainable water purification solutions. The government’s Special Technology Zones Authority (STZA) could serve as an incubator for climate-tech entrepreneurs—if complemented with policy and fiscal support.
International collaboration can also unlock innovation. The China-Pakistan Economic Corridor (CPEC), if steered in the right direction, offers a platform to bring in green infrastructure, energy efficiency technologies, and joint ventures in climate-smart agriculture. However, this requires Pakistan to renegotiate priorities under CPEC with sustainability at the forefront.
A Call to Action: Climate as Core Business Strategy
Climate change is no longer an abstract environmental concern—it is a defining business risk and, if leveraged smartly, a competitive advantage. The costs of inaction are evident in damaged infrastructure, disrupted trade, and eroding investor confidence. But the dividends of action—access to green finance, export competitiveness, and brand reputation—are equally compelling.
The government must set the tone through clear regulatory mandates, enforceable emissions targets, and enabling policies for green growth. But the private sector cannot wait. Pakistan’s business leaders must go beyond the PR-friendly optics of climate activism and adopt data-driven, transparent, and scalable sustainability practices.
In doing so, they will not only safeguard their bottom lines but also help steer the country toward a more resilient, inclusive, and sustainable economic future.
About the Author
Malik Nadeem Akhtar is the Chief Business Correspondent at Herald Star. He specializes in economic policy, trade dynamics, and corporate sustainability, with a focus on how financial systems intersect with global development challenges.
