Pakistani Banks Score Poorly on Climate and Biodiversity Benchmarks, Highlighting Gaps in Financing Safeguards

Overview

A new assessment released by Fair Finance Pakistan on 13 October 2026 finds that seven of the country’s largest commercial banks average 1.12 / 10 for climate‑policy performance and 1.69 / 10 for biodiversity. The study, which follows the methodology of the Fair Finance Guide International, points to a stark mismatch between banks’ publicly stated sustainability commitments and the protective clauses they embed in loan agreements.

Key Findings

• Average scores: 1.12 for climate policy, 1.69 for biodiversity (out of a possible 10). No bank reached the 42 % threshold that the benchmark defines as a minimum acceptable level.
• Policy coverage:
• Internal operations: 75.4 % of the banks’ own activities are covered by sustainability policies.
• Financed projects: only 23.1 % of the companies and projects receiving credit are covered.
• Individual bank scores (rounded to two decimals):
• Allied Bank – 3.05 (climate), 0 ( biodiversity)
• HBL – 1.25 (climate), 0 (biodiversity)
• MCB – 0 (climate), 0 (biodiversity)
• Meezan Bank – 1.25 (climate), 0 (biodiversity)
• National Bank of Pakistan – 0 (climate), 0 (biodiversity)
• Standard Chartered Pakistan – 5.31 (climate), 0 (biodiversity)
• UBL – 0.94 (climate), 0 (biodiversity)
• Methodology: The assessment rates banks on the strength of publicly disclosed policies, the existence of financing safeguards, and alignment with Pakistan’s Nationally Determined Contribution (NDC) 3.0 and international biodiversity commitments.

Reported Comments

• Asim Jaffry, Country Program Lead, Fair Finance Pakistan, said: *“Banks demand accountability from borrowers; their boards must apply the same discipline to the environmental and social outcomes of financing.”* He warned that sustainability statements alone are insufficient without enforceable loan‑level guarantees.
• Huma Iqbal, Policy Analyst, Fair Finance Pakistan, added: *“The test is whether stronger policy actually changes financing decisions and forces banks to publicly account for implementation on clear, verifiable timelines.”*

Practical Implications

• For banks: The scores suggest an urgent need to embed climate‑risk and biodiversity clauses into credit contracts, publish implementation milestones, and disclose financed emissions.
• For regulators: Pakistan’s State Bank issued a climate‑risk framework in December 2025 that requires board‑level approval of implementation plans by September 2026 and full compliance by June 2029. The benchmark highlights that many banks have yet to meet these internal deadlines.
• For investors and correspondent banks: The findings provide a data point for ESG‑focused due diligence. Investors may request independent verification of banks’ financing safeguards before allocating capital.
• For civil society: The gap between policy coverage for internal operations versus financed activities underscores the need for advocacy around loan‑level environmental safeguards.

How to Verify the Findings

• Access the original Fair Finance Pakistan report – the organization typically publishes the full methodology and scorecards on its website.
• Cross‑check bank disclosures – review each bank’s annual sustainability report, ESG disclosures, and any statements filed with the State Bank of Pakistan.
• Consult the State Bank’s climate‑risk framework – the regulator’s portal contains the September 2026 board‑approval deadline and the June 2029 compliance target.
• Compare with international benchmarks – the Fair Finance Guide International’s criteria are publicly available and can be used to replicate the scoring process.

Next Steps Suggested by Fair Finance Pakistan

• Publish detailed implementation roadmaps with measurable milestones.
• Strengthen biodiversity and pollution‑prevention clauses in loan agreements.
• Disclose financed‑emissions data and transition requirements imposed on borrowers.
• Encourage supervisory authorities, international investors, and correspondent banks to demand demonstrable progress.

*The assessment does not quantify the actual environmental damage caused by individual loans; it solely evaluates the robustness of publicly disclosed policies and safeguards.*