Seven of the largest commercial banks in Pakistan are falling short when it comes to climate and biodiversity policies, a new report by Fair Finance Pakistan has claimed.
According to the latest Fair Finance Pakistan benchmark, the seven banks achieved an average score of 1.12 out of 10 for climate policies and 1.69 for biodiversity, which exposes a ‘critical gap between sustainability commitments and the publicly disclosed safeguards governing their financing’.
The assessment was conducted using the Fair Finance Guide International methodology and led by Dr Abid Aman Burki. The banks covered by the report included Allied Bank, HBL, MCB, Meezan Bank, National Bank of Pakistan, Standard Chartered Pakistan and UBL.
‘Demand accountability’
“Banks demand accountability from borrowers,” commented Asim Jaffry, country program lead, Fair Finance Pakistan. “Their boards must apply that discipline to the environmental and social consequences of financing.
“A sustainability statement cannot substitute for lending safeguards. Communities need clean air, protected ecosystems and enforceable client requirements. Investors need evidence that bank policies govern the money leaving the balance sheet.”
According to the report, banks’ commitments are ‘weakest’ in areas where their capital can shape environmental and social outcomes.
In terms of biodiversity, for example, MCB and National Bank of Pakistan scored zero while UBL received 0.94 and HBL and Meezan Bank each scored 1.25. Allied Bank scored 3.05, followed by Standard Chartered Pakistan on 5.31.
The results come as Pakistan implements its Nationally Determined Contribution (NDC) 3.0 climate agenda, which will be largely driven by the financial sector, Fair Finance Pakistan noted. It added, however, that these policy scores ‘provide little assurance that bank financing consistently supports that direction’.
Evidence of progress
The group has called on the boards of financial institutions to publish implementation milestones, strengthen safeguards covering biodiversity and pollution, and disclose financed emissions and client transition requirements. It also urged investors and correspondent banks to demand evidence of progress.
“The test is whether stronger policies change financing decisions and make banks publicly answerable for implementation, against clear, verifiable deadlines,” added Huma Iqbal, policy analyst, Fair Finance Pakistan. Read more here.
