KARACHI: State Bank of Pakistan Governor Jamil Ahmed said there is a need to substantially increase credit allocation to projects that enhance climate resilience and promote environmentally sustainable growth. “It is essential that we leverage our financial sector’s potential to align with the global shift toward sustainability contributing to both our national priorities and international commitments,” Mr Ahmed stressed while speaking at an event titled “Enabling Green Financing and Green Bonds via Credit Enhancement Solutions”, organised by InfraZamin Pakistan. The governor’s address focused on two main themes — Pakistan’s vulnerability to climate change and urgency of effectively tackling this challenge. Mr Ahmed highlighted the global urgency to address climate change, citing massive natural disasters such as the catastrophic floods in 2022, which caused economic losses of approximately $30bn in Pakistan. He reiterated Pakistan’s commitment to the Paris Agreement, which includes reducing emissions by 15pc by 2030, with an additional 35pc reduction contingent upon external financing. He also noted plans to generate 60pc of all energy from renewable sources. SBP provides Rs95bn for renewable energy projects He elaborated on the significant strides made by Pakistan despite macroeconomic challenges, and the critical role played by the central bank. He shared that the SBP has introduced refinancing schemes for renewable energy, disbursing Rs94.7bn by end of June 2024, financing more than 4,500 renewable energy projects with a cumulative energy generation capacity of almost 2,061 megawatts. “The SBP has issued comprehensive Green Banking Guidelines to enable regulated entities to recognise and manage environmental risks arising from their operations,” he added. In collaboration with the World Bank, the SBP is developing a comprehensive Green Taxonomy to establish a standardised framework for the classification of green and transitional activities. “This will provide a clear framework for identifying and classifying green and transitional activities, facilitating the flow of capital into sustainable projects,” added Mr Ahmed. He shared that SBP has included climate change risk as a key theme in its Strategic Plan 2023-28. This plan outlines a range of goals and policy initiatives for the next five years to ensure sustainable growth.