PAKISTAN’S climate crisis demands massive policy reforms and substantial financial resources to build national resilience. While the government is committed to achieving ambitious targets through its 2025 NDCs, the institutional framework for mobilising resources is fragmented. The Rules of Business (RoB), 1973, are ambiguous on the division responsible for accessing climate finance, negotiating domestic and international private sector investments and climate-proofing sectoral policies. Accountability vacuums have resulted, undermining the state’s capacity to manage critical climate resources.

Financial Authority: Under RoB, mobilising international climate finance requires consensus among at least four divisions — finance, economic affairs, planning and climate — with no single one holding a clear lead mandate. The Finance Division under Rule 12 requires mandatory concurrence for climate initiatives affecting finances. The Economic Affairs Division (EAD) is designated by Rule 56 as the statutory channel for external assistance. Climate-proofing the PSDP still falls outside the Planning Division’s allocated business. Other functions, including soliciting investments and regulating the private sector’s involvement, are distributed across multiple divisions.

The climate ministry handles climate policy formulation, yet RoB’s Schedule II doesn’t give it a role in initiating financial mobilisation or donor negotiations. While it oversees national climate goals and reports on multilateral environmental agreements it lacks mandate over climate-proofing expenditure, loans, investments, sectoral policies or budgets. Schedule II observes that no division, including climate, has a full mandate over mobilising financial resources, private sector engagement, PSDP climate-proofing, or donor assistance negotiation. These are distributed across multiple divisions, which makes cross-coordination necessary. Little clarity on the roles of federal ministries and provincial departments exacerbates this institutional gridlock. Meanwhile, provincial autonomy in climate finance investments is limited by the concentration of power within federal structures.

The Rules of Business lack clarity on specific institutional roles in climate governance.

The Rules of Business lack clarity on specific institutional roles in climate governance.

Structural paradox: Instead of addressing the complexity of the international climate finance architecture, following the 2016 Paris Agreement, Pakistan created three institutions in 2017 — outside RoB remit. The Public Private Partnership Authority (P3A),housed in the Planning Division, is not listed in RoB Schedules I-II as a division or attached department; it operates ambiguously as an autonomous body. Its mandate is to provide an enabling framework for infrastructure PPPs, but neither the P3A Act nor the federal PPP policy mandates climate-proofing. The reference to the Paris accord in the policy remains aspirational; climate criteria are voluntary and dependent on sponsoring divisions’ priorities. P3A facilitates sectoral proposals without the authority to reject. The National Disaster Risk Management Fund is Pakistan’s largest climate adaptation fund. Since its inception, it has moved from EAD to the climate ministry before settling in the Planning Division. Not listed in Schedule III, it operates outside the RoB as a donor-financed parallel track to the PSDP, circumventing NFC provincial sharing. Its statutory board comprises the planning, finance, EAD and climate secretaries, as well as independents, yet its investments are detached from NAP (National Adaptation Plan) and NDC targets despite operational flexibility.

The Pakistan Climate Change Authority, created under the Climate Change Act, 2017, was envisioned as a high-powered alternative for climate policy, planning, resource mobilisation and apex decision-making, with a dedicated climate finance member to address growing financing needs. But it doesn’t appear in Schedules I through III, meaning it exists outside the formal executive framework through which federal ministries derive and exercise their fiscal and administrative authority. This omission has not been corrected and the climate ministry remains confined to historical policy functions without fiscal powers, donor negotiation authority, or enforceable coordination mandates over other divisions.

Desperate actions: This confusion results in reactions that may be violative of RoB. Lacking clarity on its mandate, the climate ministry’s 2014 Climate Finance Unit faded away. As foreign exchange reserves plummeted amid the 2022-23 default concerns, multiple federal entities launched parallel climate finance units in 2023. The climate ministry revived its unit as the Climate Finance Wing; the Planning Commission created the Sustainable Finance Bureau to align public spending with green targets; the Finance Ministry launched its Climate Finance Facilitation Unit for fiscal policy and green bonds; and the EAD retained donor negotiations. The provinces followed suit: Punjab’s Strategic Planning and Financing Unit targets green investments; KP’s Sustainable Development Unit seeks climate aid for green growth; Sindh’s SDGs Support Unit leads climate/ SDG financing and carbon credits.

Private sector gaps: The most significant gap concerns the private sector. Renewable energy and resilient infrastructure need massive investment. But the administrative structure isolates these functions in separate divisions. Under Rule 5, each minister is responsible only for their own division; thus, the climate ministry cannot impose climate-proofing on energy, transport or agricultural policies. Resultantly, private sector climate finance needs coordination among the Finance Division for financial regulation, the State Bank for banking guidance, the SECP for capital markets, the Commerce Division for business engagement, the Board of Investment for FDI promotion, Industries and Production for SMEs, and Climate Change for policy alignment. While the SIFC focuses on private sector investments, it leaves climate-specific mobilisation without dedicated coordination mechanisms. The RoB doesn’t provide a mechanism for integrated private sector climate mobilisation. When investment falls short, the current system ensures that no single entity can be held accountable. Lack of a designated ‘anchor’ for climate-smart investments forces potential investors to navigate a labyrinth of uncoordinated entities. Without an integrated mechanism, the very capital essential for resilience is deterred by bureaucratic fragmentation.

Accountability: As overlapping roles persist, policy intent cannot translate into executive power, leaving climate finance trapped in institutional silos without unified executive authority. Responsibilities remain scattered across divisions and dormant bodies, including the Pakistan Climate Change Council chaired by the prime minister. No single authority is accountable for Pakistan’s $565.7 billion NDC financing gap.

The writer is a climate change and sustainable development expert.

Published in Dawn, February 26th, 2026

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