Pakistan's record breaking floods in 2011 and 2022 washed away any illusion that climate change is a distant threat. The economic cost of these disasters was around $58 billion, and even the IMF has tied new support to climate action. Clearly, climate change isn't just an environmental issue, it's a financial one. Are our banks prepared for this new reality?

Globally, over 130 major banks have pledged to align their portfolios with net-zero emissions by 2050. HSBC, for instance, aims to provide between $750 billion and $1 trillion in sustainable financing by 2030 as part of its climate strategy. France's BNP Paribas has gone a step further, stopping financing the heavy carbon emitting sectors. These high-profile moves show banking giants pivoting towards greener investments. In practice, this means rethinking lending, more financing for renewable energy and cutting off loans to the worst polluters. These moves show a pivot toward greener investments and prove that banks can be powerful allies in fighting climate change.

Pakistan's financial sector has only recently embarked on its own green banking journey, but early steps are promising. The State Bank issued Green Banking Guidelines in 2017, and since then regulators introduced an Environmental and Social Risk Management manual-2022 and a draft Green Taxonomy to define "green" investments. The impact is........

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