Pakistan’s Climate Crisis Needs More Than Sympathy; It Needs Strategy
Azhar Saeed
Despite being among the top ten countries most affected by climate change, Pakistan has underperformed in mobilizing both international and domestic climate finance. This represents an untapped opportunity Pakistan can no longer afford to ignore. The challenge lies not just in numbers but in rethinking how we structure, attract, and deploy climate capital to meet our mitigation and resilience goals and to claim our rightful share in global climate justice.
To chart a path forward, it is instructive to consider the examples of Brazil and Indonesia. Their experiences show how strong national ownership, institutional innovation, and strategic planning can produce real, measurable outcomes, both financially and environmentally.
Brazil’s climate finance journey began with the creation of the Amazon Fund in 2008 and the Climate Fund in 2009, both managed by the Brazilian Development Bank (BNEDs). The Amazon Fund quickly became a global model of results-based climate investment. Between 2009 and 2018, it received nearly 1.3 billion dollars in donations. Funds were disbursed, averaging 53 million dollars annually, for conservation and sustainable land use projects. Crucially, donors contributed only when independently verified reductions in deforestation were achieved. A multi-stakeholder oversight committee ensured transparency and accountability, bolstering both domestic legitimacy and international trust. By 2017, cumulative disbursements had reached around 250 million dollars, backing land-use reforms and forest restoration across Brazil.
This early emphasis on credibility laid the foundation for integrating climate finance into Brazil’s rural credit and banking systems. Between 2015 and 2020, climate-aligned rural credit averaged 3.2 billion dollars annually, enabled by regulatory mandates that pushed banks toward sustainable agriculture. In 2017, Brazil issued a one billion dollar green bond to support renewable energy, positioning itself as a leader in climate-aligned capital markets.
Blended finance mechanisms followed. One case is Mombak, a reforestation startup that received 18 million dollars from BNDES and Santander under the Climate Fund. Mombak combined domestic capital with voluntary carbon market revenues to restore degraded Amazonian landscapes. In 2023, Brazil introduced a national sustainable finance taxonomy that integrates climate, gender, and racial equity. From 2004 to 2017, these efforts contributed to a 75 percent reduction in Amazon deforestation, registration of over 530,000 rural properties, and livelihood improvements for 140,000 individuals. Today, Brazil is promoting a pan-Amazon green bond initiative and seeking seven billion dollars annually through the Tropical Forests Forever Facility.
What drives Brazil’s success is a combination of sovereign control over funds, results-based payments, mandatory climate lending, domestic banking leadership, and integration of environmental, social, and governance frameworks. What began as project-level interventions has matured into a comprehensive climate finance ecosystem.
Indonesia offers another powerful example. In 2018, it issued the world’s first sovereign green sukuk, mobilizing 1.25 billion dollars for clean energy and climate resilience under a framework independently verified for mitigation potential. But the groundwork was laid earlier, in 2015, when Indonesia pioneered climate budget tagging. This enabled the Ministry of Finance to track climate-related public spending, which totaled 951 million dollars in its first year. Over time, the system was integrated with thematic bond issuances and performance-based budgeting.
By 2023, Indonesia’s thematic bond market had surpassed ten billion dollars, with 2.2 billion dollars issued that year alone. Green sukuks accounted for 6.8 billion dollars by 2021. The share of green investors rose from 29 percent in 2019 to 57 percent in 2021, reflecting rising confidence in the country’s green finance framework.
Institutionally, Indonesia consolidated financing mechanisms under the Environmental Fund Management Agency, created in 2019 under the Ministry of Finance. It manages domestic and international climate funds under a unified framework capable of blending grants, loans, and carbon revenues. Complementing this, SDG Indonesia One, a blended finance platform, has mobilized public and private capital for climate infrastructure, with 64 percent earmarked for environmental initiatives. Green startups and impact investors are now supported through Indonesia’s green taxonomy, first published in 2024 and recently updated in 2025. Results include over ten million tonnes of CO₂ emissions avoided, expanded waste services to millions, and railway infrastructure developed with 130 million dollars in climate-aligned funding. Indonesia also entered marine finance with a sovereign blue bond in 2022 and supported 12 startups through blue bond accelerators now serving 60,000 individuals and 500 organizations.
Indonesia’s model is built on modernized climate budgeting, innovative Islamic finance tools, centralized financing institutions, private participation through thematic bonds, and a robust taxonomy. Within five years, Indonesia has moved from policy ideas to international leadership.
Pakistan, in contrast, lacks several foundational elements for scaling climate finance. A key gap is the absence of an operational sustainable finance taxonomy. While the State Bank and the Securities and Exchange Commission initiated work and produced a draft, it has yet to be adopted. As a result, investors lack a common standard to evaluate green investments. Pakistan also lacks a comprehensive climate budget tagging system. Without a method to classify and track climate-related public expenditure, it is impossible to measure whether spending supports mitigation or adaptation, or to identify financing gaps.
Furthermore, Pakistan’s Nationally Determined Contribution (NDC) and National Adaptation Plan (NAP), remain mostly aspirational. They are not supported by a structured investment plan or pipeline of bankable projects, limiting the country’s ability to attract private finance or access mechanisms like the Green Climate Fund at scale.
Institutionally, Pakistan’s landscape is fragmented. It lacks a centralized climate finance authority that can coordinate efforts or serve as a one-window facility for investors. Green Climate Fund accreditation remains limited, and most financial institutions lack internal expertise to evaluate climate-aligned portfolios. Existing efforts, such as the green sukuk by WAPDA or solar financing by JS Bank, remain scattered and donor-driven rather than part of a cohesive national strategy.
To move forward, Pakistan must operationalize its sustainable finance taxonomy and adopt climate budget tagging across all levels of government. A dedicated climate finance authority is needed to coordinate national efforts and serve as an investment gateway. The country must also develop a structured investment plan aligned with its NDC and NAP, supported by a pipeline of viable projects. It should strengthen GCF accreditation, incentivize private investment through de-risking instruments, and issue more sovereign green bonds to signal political commitment and market confidence.
Pakistan’s climate vulnerability is not in doubt. But turning that vulnerability into resilience, both financial and environmental, requires more than goodwill. It requires systemic reforms, institutional readiness, and a willingness to learn from countries that started later but moved faster.
