Pakistan

Pakistan has adopted several national climate and development frameworks that collectively guide green growth and climate action, including the National Climate Change Policy 2021, the National Adaptation Plan (2023), and its Nationally Determined Contributions under the Paris Agreement. In addition, the Government of Pakistan launched the Uraan Pakistan Economic Transformation Plan in December 2024 as an ambitious roadmap to address structural economic challenges and guide long-term development. The plan aims to position Pakistan as a $1 trillion economy by 2035 and a $3 trillion economy by 2047, while advancing key pillars such as exports, digital transformation, environmental sustainability, energy development, equity, and empowerment. Together, these frameworks promote a whole-of-government approach to integrating climate action with national economic planning.

Pakistan’s climate commitments include a target to reduce greenhouse gas emissions by up to 50% below projected levels by 2035, including 17% unconditional reductions and an additional 33% conditional on international financial support. Supporting policy instruments include the National Climate Finance Strategy (2023) and a national green taxonomy formalized in 2025, which serves as a living framework to help align public and private investments with sustainability objectives while incorporating international best practices adapted to the national context.

At the same time, Pakistan has not yet formally declared a net-zero target year. The development of the country’s Long-Term Low Emission Development Strategy (LT-LEDS) is ongoing and expected to inform this decision. While integrated energy modelling has been conducted for 2050, the government is considering multiple long-term decarbonization scenarios for 2050, 2060, and 2070 in order to determine an appropriate net-zero pathway, taking into account economic implications and the cost of inaction.

Pakistan has a corporate governance framework for listed companies based on the Companies Act, 2017 and the Listed Companies (Code of Corporate Governance) Regulations (2019) as amended. These regulations require boards to include independent directors (minimum two or one third of the board) and at least one female director to strengthen gender representation, and also emphasize accountability processes such as board evaluation, committee structures, and director training. While these provisions promote basic gender inclusion and board oversight, they do not include broader gender balance targets or mechanisms for worker participation in governance. On environmental, social, and governance (ESG) reporting, Pakistan is moving toward mandatory disclosure. The Securities and Exchange Commission of Pakistan (SECP) issued revised ESG Disclosure Guidelines (2025) aligned with the Pakistan Green Taxonomy, under which ESG reporting will remain voluntary until June 2029 and then transition to mandatory implementation through a phased schedule. Although ESG practices are increasingly encouraged and linked with capital market initiatives, including taxonomy aligned disclosures, Sustainable Development Goal (SDG) alignment is not yet codified in a binding national corporate governance strategy.

Pakistan has transparency mechanisms and some consultation practices, but it does not require a standardized, government-wide process for public consultation or inclusive impact assessments across all legislation and policies. The Rules of Business (1973) primarily regulate consultation within government, requiring coordination between ministries and divisions during policy formulation and legislative drafting, rather than mandating public participation. Meanwhile, the Right of Access to Information Act (2017) strengthens transparency by granting citizens the legal right to access information held by public bodies and promoting government accountability, but it does not require public consultation during policymaking. Public participation is more formally embedded in specific regulatory areas, particularly environmental decision-making. Under the environmental regulatory framework established by the Pakistan Environmental Protection Act (1997) and associated EIA regulations, projects requiring environmental impact assessments must include public notice and opportunities for public comment or hearings. In addition, some regulators such as financial and sectoral authorities occasionally invite feedback on draft rules and policies. However, these practices are not consistently mandatory across all policy processes and do not systematically ensure the inclusion of marginalized or vulnerable groups.

Pakistan has begun developing several “beyond GDP” measurement tools that incorporate social and environmental indicators alongside traditional economic statistics. These include the national Multidimensional Poverty Index (MPI), which measures deprivation across education, health, and living standards, as well as broader sustainability metrics such as inclusive wealth indicators that account for human, natural, and produced capital. In addition, Pakistan has initiated early efforts toward Natural Capital Accounting, linked to the United Nations System of Environmental-Economic Accounting (SEEA), through pilot projects and capacity-building initiatives. These tools contribute to improved monitoring of development outcomes, environmental sustainability, and poverty dynamics. However, these measurement frameworks are still evolving and remain institutionally fragmented. While they support policy analysis and sectoral monitoring, they have not yet been fully integrated into a single national “beyond GDP” framework systematically applied in macroeconomic planning, public investment decisions, and budgeting processes.

Pakistan has developed a green banking framework led by the State Bank of Pakistan (SBP) through its Green Banking Guidelines (2017), which require banks and development finance institutions to integrate environmental risk management into their lending portfolios, promote green investments, and reduce the environmental footprint of their own operations. SBP has also supported green finance through dedicated refinance schemes for renewable energy projects, which provide concessional funding to banks for lending to solar, wind, and other clean energy investments. More recently, Pakistan has strengthened the sustainable finance framework by introducing the Pakistan Green Taxonomy (2025), which provides a science-based classification system for identifying environmentally sustainable economic activities and guiding green investment. In addition, SBP has issued Climate Stress Testing Guidelines (2025) requiring regulated financial institutions particularly systemically important banks to incorporate climate-related risks into their stress-testing and risk management processes, helping the financial sector assess potential impacts of climate change on financial stability.

Pakistan has begun integrating environmental and climate considerations into fiscal policy through climate budget tagging, FY2014-2015, by UNDP for the Federal and KP Province budget and then around FY2023–24, to classify expenditures according to climate relevance. The system has been expanded and institutionalized further in FY2025–26, including tagging subsidies and integrating the system into financial management software. This system classifies climate-related expenditures across ministries under categories such as mitigation, adaptation, and supporting activities, enabling the government to track climate-sensitive spending and improve transparency in fiscal planning. The framework has also been extended to include the tagging of subsidies and other public expenditures to better identify the climate relevance and environmental impact of fiscal policies. In the financial sector, several complementary measures have been introduced under the leadership of the State Bank of Pakistan (SBP). These include the Green Banking Guidelines (2017), which require banks to incorporate environmental risk management and promote green lending, as well as renewable energy refinance schemes that provide concessional financing for clean energy projects. More recently, Pakistan has strengthened the sustainable finance framework by introducing a national Green Taxonomy (2025) to define environmentally sustainable economic activities and by issuing Climate Stress Testing Guidelines (2025) requiring regulated financial institutions to assess climate-related financial risks within their stress-testing frameworks.

Pakistan has limited integration of sustainability provisions within its formal trade agreements. The most prominent sustainability-linked trade arrangement affecting Pakistan is the European Union’s Generalised Scheme of Preferences Plus (GSP+), which provides preferential market access in return for the ratification and effective implementation of 27 international conventions covering human rights, labour rights, environmental protection and good governance. However, GSP+ is a unilateral trade preference scheme granted by the EU rather than a negotiated trade agreement containing dedicated environmental chapters. Pakistan’s Strategic Trade Policy Framework (2020–25) primarily focuses on export growth, market access and competitiveness, with limited explicit emphasis on environmental standards or the liberalization of green goods and services. As a result, sustainability considerations are not yet systematically embedded across Pakistan’s trade policy architecture.

Pakistan does not currently operate a national carbon pricing system, such as a carbon tax or emissions trading scheme, nor does it have a legally binding carbon budget framework aligned with its climate targets. However, the government has begun developing institutional arrangements for participation in carbon markets. In November 2024, Pakistan launched its National Carbon Market Policy at COP29, establishing a framework to enable carbon credit trading and participation in international carbon markets under Article 6 of the Paris Agreement. While this policy is intended to attract green investment and support emissions-reduction projects, it does not yet introduce a domestic carbon pricing mechanism. Pakistan’s NDC 3.0 also signals interest in market-based mechanisms and carbon market cooperation but does not commit to implementing a national carbon price.

Pakistan has established a cross-sector governance framework for climate and green economy planning, anchored in the Pakistan Climate Change Act (2017), which created the Pakistan Climate Change Council and the Climate Change Authority to coordinate climate policy across government levels. This framework is supported by key national strategies such as the National Climate Change Policy (2021), the National Adaptation Plan (2023) and NDC 3.0 (2025), which address multiple sectors and promote climate risk screening in public investment.

Sector-specific policies also exist, including the Alternative & Renewable Energy Policy (2019), the National Electric Vehicle Policy (2020) and updated energy-efficient building codes (2023–2025). However, implementation and coordination remain uneven across sectors, and challenges in federal–provincial coordination.

Pakistan does not yet have a comprehensive national circular economy roadmap with economy-wide targets or a regulatory framework covering areas such as reuse standards, circular public procurement, or repair rights. However, efforts are underway to develop a National Circular Economy Policy, which aims to integrate circular economy principles into national planning and resource-efficiency strategies. In the meantime, several sector-specific initiatives have emerged, particularly in the waste and plastics sector. These include the National Plastic Action Roadmap, developed in collaboration with international partners, which seeks to improve plastic waste management, expand recycling systems and support circular business models, including those led by micro, small and medium enterprises (MSMEs). While these initiatives represent progress, circular economy governance in Pakistan remains fragmented and largely sector-focused

Pakistan has established a national policy framework for green mobility primarily through the National Electric Vehicle Policy (2019), which aims to promote electric mobility through fiscal incentives, local manufacturing support and the gradual expansion of charging infrastructure. The policy sets targets for 30% of new vehicle sales to be electric by 2030 and 90% by 2040, with an early focus on electrifying motorcycles, rickshaws and buses. The government has also been developing an updated New Energy Vehicles (NEV) policy to further expand clean transport technologies and support the transition to low-emission mobility. Implementation is underway but uneven and largely driven by provinces, with initiatives such as electric bus programs in Punjab and Sindh. While policies like the National Clean Air Policy (2023) support cleaner transport standards, progress remains modest due to structural and cost barriers.

Pakistan’s renewable energy strategy is anchored in the Alternative and Renewable Energy (ARE) Policy 2019, which targets 20% renewable electricity capacity by 2025 and 30% by 2030, excluding large hydropower. Implementation is supported by the Indicative Generation Capacity Expansion Plan (IGCEP), which guides long-term power sector planning and promotes the integration of renewable energy through measures such as competitive procurement of solar and wind projects and the expansion of distributed solar generation through net-metering regulations. Pakistan’s Updated Nationally Determined Contribution (2025) also includes a target to achieve 60-69% renewable energy in the power mix by 2030, expand hydropower, solar, wind and phase out imported coal projects. Despite this policy framework, renewable energy deployment continues to face challenges related to financing constraints, grid integration and regulatory uncertainty. In addition, current renewable energy policies are primarily focused on the electricity sector, with comparatively limited policy attention to renewable energy deployment in heating, cooling and transport.

Pakistan’s National Climate Change Policy (2021) and National Adaptation Plan (2023) link climate action with broader development objectives, including poverty reduction, gender inclusion and the protection of vulnerable livelihoods. These frameworks emphasize pro-poor and gender-responsive climate adaptation and resilience building in sectors such as agriculture, natural resource management and disaster risk reduction. In addition, initiatives such as the Green Stimulus programme, and large-scale nature-based programmes like the Ten Billion Tree Tsunami have been promoted for their potential to generate green employment while supporting ecosystem restoration and climate resilience. However, Pakistan does not yet have a dedicated national action plan for green jobs or a comprehensive just transition framework, and employment impacts of climate policies are mainly addressed through individual programmes rather than a unified national strategy.

Pakistan has begun incorporating just transition principles into its climate policy framework, particularly through NDC 3.0, which highlights the need to ensure that the shift toward a low-carbon and climate-resilient economy is socially inclusive. The strategy proposes the development of sector-specific just transition plans, along with impact assessments, employment monitoring systems and social dialogue with workers, businesses and affected communities. It also signals the intention to introduce measures such as worker protection, re-employment support and green job creation to address the socioeconomic impacts of decarbonization. However, Pakistan does not yet have a comprehensive national just transition framework with clearly defined mechanisms for benefit-sharing, worker protection and community transition planning, and current efforts remain largely at the level of policy commitments and multi-stakeholder initiatives.

Pakistan provides some support for greener business practices through the National SME Policy (2021) and programmes implemented by the Small and Medium Enterprises Development Authority (SMEDA). These initiatives include technical guidance, training and advisory services aimed at improving resource efficiency and promoting the adoption of energy-efficient and renewable energy technologies. SMEDA’s Energy Desk, developed in partnership with international organizations, provides information, capacity-building and technical assistance to help SMEs identify and implement energy-efficiency and renewable energy solutions. In the financial sector, banks are encouraged to support environmentally sustainable investments through green banking and environmental risk management frameworks introduced and guided by the State Bank of Pakistan. Pakistan does not currently have a dedicated legal form specifically designed for social enterprises. Social enterprises typically operate using existing legal structures such as non-profit companies, societies or conventional businesses, although policy discussions and reform proposals aimed at strengthening the ecosystem for social entrepreneurship are ongoing.

Pakistan has a large national social protection system centered on the Benazir Income Support Programme, which provides cash transfers to low-income households, particularly women, and was expanded through the broader Ehsaas Programme. These initiatives have strengthened social assistance through improved targeting and digital delivery mechanisms, including the National Socio-Economic Registry (NSER), biometric verification and online eligibility and payment systems. Reforms have also improved data management and coordination across federal and provincial programmes. In addition, some green employment initiatives have been implemented through environmental programmes such as large-scale afforestation and conservation projects.

Pakistan has a National Biodiversity Strategy and Action Plan (NBSAP) 2017–2030, which establishes national biodiversity conservation targets and includes monitoring mechanisms based on indicators and periodic reporting. The strategy contributes to the achievement of global biodiversity objectives and supports progress toward Sustainable Development Goals 14 (Life Below Water) and 15 (Life on Land). However, the current NBSAP was developed under the earlier Aichi Biodiversity Targets framework and are currently being revised with the support of international organization. Pakistan has expanded conservation efforts in recent years, including the designation of three marine protected areas namely Astola Island, Churna Island and the Indus Delta, and the expansion of terrestrial protected areas, which together cover around one-fifth of the country’s land area. Despite this progress, marine protection remains very limited, with protected areas covering less than 1% of Pakistan’s marine territory, highlighting a significant gap in ocean conservation.

Pakistan has committed to advancing Natural Capital Accounting (NCA) in collaboration with international partners, including the World Bank, and aligning with the United Nations System of Environmental-Economic Accounting (SEEA). Work on NCA is being supported within the national statistical system led by the Pakistan Bureau of Statistics, where initial institutional arrangements and technical work have been established. Implementation remains at an early stage, with efforts focusing primarily on the development of physical asset accounts for key natural resources such as land, forests, water and minerals, alongside the identification of relevant datasets and methodologies for future expansion into more comprehensive environmental-economic accounts.

Pakistan has several policies addressing elements of the food system, including the National Food Security Policy (2018), the Food Systems Transformation Pathways (2021) and a National Action Plan on Sustainable Consumption and Production (2017), along with a multi-sectoral nutrition strategy (2018–2025). These frameworks, however, remain somewhat fragmented.

There are some environmental fiscal measures and sustainable finance tools in place, such as the Climate Support Levy on petroleum products (2025–26) and the issuance of a sovereign Green Sukuk to support green investments. The government has also expanded protected areas and conservation-related employment programs, and biodiversity finance planning is underway with international support. However, progress in reforming nature-harmful subsidies remains limited, and Pakistan has yet to establish large-scale dedicated financing mechanisms specifically for biodiversity restoration.

Pakistan has included some green elements in its recovery policies, most notably the 2020 Green Stimulus, which created jobs through nature-based programs such as the Ten Billion Tree Tsunami and conservation initiatives. However, the broader COVID-19 economic response focused mainly on general economic relief and growth support and had limited environmental conditionality. After the 2022 floods, recovery planning increasingly incorporated climate resilience, particularly through the Resilient Recovery, Rehabilitation and Reconstruction Framework (4RF). Climate considerations have also been incorporated into some international financing arrangements, including IMF-supported programs that emphasize climate resilience and macroeconomic stabilization. Nevertheless, Pakistan’s overall recovery approach continues to rely largely on conventional economic stabilization and reconstruction measures, with green recovery elements playing a more limited role.