Pakistan and green financing
Construction activity is one of the greatest causes of environmental degradation and resource depletion the world over. The ‘Clean and Green Pakistan’ vision of the incumbent government is also threatened by the mentioned activity. Projects like ‘Billion Tree Tsunami’ run the risk of losing their environmental impact due to mega construction projects which are devoid of green building standards, green supply chain methods, green cement and brick manufacturing technology and green financing incentives. It is highly unlikely that the environmental benefits of the said tree project are not offset by the massive adverse environmental impacts produced by the various construction projects launched by the government. The government thus needs to adopt a synergic approach while planning projects in different sectors to ensure environmental sustainability.
Apart from the Billion Tree Tsunami, the government has also launched Digital Pakistan initiative, Naya Pakistan Housing Scheme and Ravi Riverfront Urban Development Project (RRUDP). All these require green equilibrium through fulfillment of environmental, social and economic sustainability objectives. The recently-launched RRUDP can play an instrumental role in shaping the country’s green finance trajectory. The project envisions the development of a sustainable living community but does not involve green business partners such as green construction companies, green cement manufacturers, green supply chain associates, renewable energy sources and green banking. The RRUDP requires Rs5 trillion worth of investment in diverse industries and involves the development of water management project which will help the country meet the UN’s SDG 6, i.e. clean water and sanitation. The fulfillment of the 2030 UN SDGs requires annual green financing of Rs450 billion. This project, when linked with the Clean and Green Pakistan vision and the UN SDGs, can prove to be a lucrative green financing portfolio for the banking sector. It can also play a key role in greening numerous industries in the country. The Environmental Protection Agency (EPA) can liaison with other institutions and private investors to nurture this opportunity of sustainable business development.
Green financing opportunities can be synergised with other projects such as CPEC and Gwadar city. Green building standards should be incorporated in the Naya Pakistan Housing Scheme which could be expanded to cities like Gwadar. The Rs11.44 trillion ML-1 Project of Pakistan Railways is an example of potential investment opportunities in Pakistan. CPEC also involves the development of cold storage chains and logistic networks across the country. But none of these projects are being pursued in line with environmental sustainability standards. Therefore, rather than cleaning and greening Pakistan, these projects can result in further environmental degradation.
Pakistan’s banking sector is a key stakeholder in this regard. Banks can provide green loans at low interest rates to industries taking steps to mitigate their detrimental environmental impacts. They can also attract environmentally conscious consumers by providing loans for green housing or hybrid car loans on comparatively lower interest rates. A surge in the area of green financing can minimise the various international pressures arising from international environmental agreements and from organisations such as IFC for accelerating green banking adoption.
Green governance is the life-saving medicine urgently required by our ailing economy. Every year, the economy suffers huge losses due to various climate change events and escalating shortage of natural resources. It is no way near the attainment of the UN SDGs, which have been developed as a blueprint for the creation of a sustainable future. The ‘Clean and Green Pakistan’ vision can prove to be a breath of fresh air for the smog-suffocated economy of the country. However, the key to the successful strategic implementation of a vision is the creation of synergy within the different components of the system. In this Green Revolution, every step will bring us closer to realising the vision of a Clean and Green Pakistan.
Published in The Express Tribune, August 20th, 2020.
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