Banks can reduce pollution by responsible financing of energy projects

KARACHI Speakers at the launch of a research study said that banks through responsible financing can reduce pollution and improve the environment as fossil fuel based projects have badly affected the atmosphere. This was stated at the launch of the study ‘In-depth analysis of SBP’s Green Banking Guidelines’ at the NED University headquarters. The Department of Economics and Management, NED University conducted this study in collaboration with the Indus Consortium. Addressing the ceremony, head of the study group and chairman of the Department of Economics and Management Sciences, NED University, Dr. Raza Ali Khan said that the aim of the green banking guidelines was to create green banking services and give importance of quality of life and society. “Banks have a real impact on the environment because they give loans to develop energy projects. They can play a significant role in reducing pollution and improving the environment by limiting the financing of renewable energy projects.” He said that as academics or policy makers, their job is only to make recommendations. “Sometimes they are adopted into policies, sometimes they are ignored.” He said that the policies were adopted on a political basis and politicians only consider policies for a short term of five years. Indus Consortium CEO Hussain Jarwar said that civil society organizations are getting the research studies done by individuals, which they don’t deserve because it was the work of professional researchers and academia.

He said that Indus Consortium is collaborating with 30 leading universities of Pakistan, including NED, in developing research studies. He said that the power sector alone is responsible for more than 50% of greenhouse gas emissions and Thar coal development is one of the biggest examples in Pakistan.

Mirza Faizan Ahmed, research associate and assistant professor in the department of economics and management sciences, said that NED University is now recognized in providing education in related departments including finance and economics.

He said the State Bank of Pakistan had issued green banking guidelines in 2016-17 with SBP, commercial banks and renewable energy developers as stakeholders. However, the environmental aspect is the least prioritized in the public and private sectors. “We need to motivate the industry to implement these guidelines,” he said.

Study Research Associate and Professor Shabbir Ahmed Baqai presented the findings of the study. He said that out of 32 commercial banks in the country, 18 banks have taken some initiative towards implementing the guidelines. The analysis focused on Habib Bank Limited as a model, which disbursed more than 40% of the funds from the total financing for the development of energy projects.

In 2017, the SBP issued the Green Banking Guidelines (GBG) with the intention of transforming the country’s economy and recognized the role of the financial sector for a low-carbon and climate-resilient economy. It helps raise awareness among investors and the banking industry to make its infrastructure, operations, investments and products sustainable.

The guidelines provide details on the responsibilities, management and organization for GBG implementation and build three themes to work on. These include environmental risk management, facilitating green business and reducing one’s own impact. The main stakeholders of the guidelines are SBP, banks/DFIs and RE clients/developers.

Fiza Qureshi, program manager at the Indus Consortium, who moderated the session, said that according to the guidelines, Pakistan’s energy transition should be 25 percent on renewable energy resources by 2025 and 30 percent by 2030.

She said that climate change demands concrete measures to deal with it. She said that due to climate change, 1,700 mm of rain was recorded in the country this year, which was not witnessed in the last 50 years and 33 million people were affected by it. “Sindh is still under flood water.”

She said that based on the results of climate change, the affected areas will face either droughts or floods. “We need to discourage fossil fuel energy and bring green initiatives to the fore by switching to solar and wind energy initiatives,” she said.

A large number of teachers, researchers and students were also present at the launch ceremony.

Leave a Reply

Your email address will not be published. Required fields are marked *