Transdisciplinary solutions: ESG, COP29 and carbon markets

With the recent smog in Lahore finally lifting and institutions reopening, people have heaved a sigh of relief but with baited breath. 

The dangerously high air quality index and resultant smog is not a short-term problem. It has been a persistent and recurring issue linked to local, regional and global inadequate measures to control the effects of climate change, leaving millions affected and at the mercy of toxic gases potentially reducing life expectancy.

The recent COP29 in Azerbaijan is another effort by the United Nations and global stakeholders to take stock of the Global Stocktake under the Paris Agreement of 2015, review Nationally Determined Contributions (NDCs), make new pledges, frameworks and policies; and assess the alarmingly slow pace of meeting the 2030 net zero targets set by several countries. 

The issues are multifarious: The lack of willingness of the oil and gas industry to reduce fossil fuel extraction, the lack of actualisation of the Loss and Damage Fund, the lack of capacity of many stakeholders in the Global South to understand the tools for adaptation, the potential for unequal discussions at the global development tables at COP29 and the G20 summits which took place within days of each other, the rise of the political right in the world, all leading to a turbulent path ahead for global climate change adaptation and mitigation.

The price that people in small island nations and countries such as Pakistan pay for the colossal burning of fuel in countries in the Global North, is exasperated by the fact that the speed of policy making and global pledges materialising is not able to keep pace with the dangerously disproportionate rise in temperatures causing massive floods and other natural disasters in parts of the world still grappling with the effects of rising temperatures.

It is no longer just the role of governments but of civil society, businesses and educational institutions to all step forward in quicker steps, devoid of bureaucratic hurdles, to contribute to the NDCs to add to the fight against climate change. But efforts by individuals in countries such as Pakistan are like taking out water from a sinking ship with the help of spoons, unless the ship is actually repaired.

Pakistan needs climate finance to adapt and it is needed now, not in 2026 or 2028 or 2030. Pakistan needs massive funding to adapt its systems and infrastructure to meet the urgent demands of adaptation in transport, urban infrastructure planning and development, water management, disaster management, capacity building, grass roots level community response and even technology to scale solutions.

The Global North must provide climate finance to remedy the damage caused by climate change or consider part payment of climate funds and part foregoing the financial debts of the Pakistan government to ensure climate justice. Pakistan has been suffering massive floods engulfing more than half the country in successive floods since 2010, despite emitting a mere 1% of the carbon emissions compared to other countries, as a result of fossil fuel burning in other parts of the world.

The Securities and Exchange Commission of Pakistan recently introduced new policy guidelines to monitor the industrial gas emissions and liabilities of companies under its ESG Sustain Portal. It is more important than ever that these Environment, Social and Governance (ESG) guidelines for industrial units are not just made voluntary disclosure guidelines but are made mandatory by law because simply put: We are racing against time and tomorrow might be too late. The latest European Commission passed the Corporate Sustainability Due Diligence Directive (CSDDD) making scope 3 emissions’ disclosure compulsory for large companies in any part of the world having business ties in Europe.

Though Pakistan has not announced a year for its net zero targets, the time is ripe to move in that direction, to attract global companies that will be required to work with supply chains and jurisdictions that support net zero targets.

Research confirms that there is a business case for the adoption of ESG metrics in financial modeling to create sustainable business growth. Companies should jump at the opportunity to do better business and simultaneously do good for the planet by learning more about adopting these business and human rights safeguards as prescribed under the ESG Guidelines of SECP. This would be a welcome first step in the direction of saving people and the planet in Pakistan. SECP has set a standard for large companies but these guidelines can be adopted by small and medium enterprises as well wherever possible. At least this is a step in the right direction and SECP or the courts can worry about corporate greenwashing later.

Another much anticipated step is the first Carbon Markets Policy of Pakistan which was recently announced at COP29. Created under article 6 of the Paris Agreement, this can be a gamechanger for Pakistan to create a holistic strategy for prioritising investment in climate change adaptation and resilience, putting Pakistan at the forefront of meeting its NDC targets.

If the smog clears in Punjab today, this will not be the end of the story or a final solution, if the only reason it goes away is because of a change in the direction of the wind or because of artificial rain.

We need urgent multi stakeholder, transdisciplinary local and science based regional solutions to take immediate steps today to hope that the situation is at least ‘controlled’ next year, even though scientifically, maintaining temperatures below 1.5C now seem more challenging than ever.

COP29 is at the moment our only hope for a platform that gives an equal footing to countries from the Global South and those from the Global North. The Pakistani government sent a strong contingent of experts this year to Azerbaijan, flanked by several strong climate change proponents. We all need to pitch in, in all possible ways, to strengthen their efforts to ensure that the multidisciplinary approach direly needed to adapt to climate change is supported and hope that 2025 is not warmer than the present hottest year to date.