The world, including Pakistan and its neighborhood, has seen rapid changes in the last few decades and greater challenges lie before economies across the world – especially in the developing countries. It was in view of these new challenges that in 2015, the Sustainable Development Goals (SDGs) were adopted by all United Nations Member States and were intended to be met by 2030.
The Sustainable Development Goals (SDGs) “wedding cake” that was presented by the Stockholm Resilience Centre, in 2016, developed by the center’s science director Carl Folke and others had illustrated that social and economic development cannot be taken up separately from ecological development. Their argument was that economy must serve society.
This cake, presented by the center has three layers and its foundation consists of the SDGs related to our physical environment. This concept demonstrates that social and economic development is essentially dependent upon the health of our biosphere.
Developing countries like Pakistan were already lagging in meeting these goals. However, the outbreak of COVID-19 and now its variants in 2020 and 2021, have further adversely affected progress towards SDGs. And have also exposed the shortcomings of the profit-maximizing economic models being practiced. Countries that rely on international financial institutions to fund development projects are now facing uncertainty over their socioeconomic challenges.
In view of these new challenges, it is getting evident that the future well-being of our planet requires a transition towards more inclusive and sustainable economic practices. Many global institutions therefore now advocate for sustainable financing which offers relatively longer-term benefits as compared to traditional financing.
In many parts of the world, efforts are thus underway to shift from shareholder model to stakeholder model of conducting business. This implies that profit-making and seeking short-term benefits are being replaced by creating integrated value that combines financial, social, and environmental factors.
Integrated value generation and sustainable financing have longer investment horizons and the outcomes are mostly intangible. Securing capital in the future would require reshaping their business practices. Lenders, in these parts of the world, are already rewarding increased sustainability by lowering interest rates.
Pakistan’s unique challenges in meeting SDGs
Pakistan’s economy is heavily dependent on agriculture. The share of the agriculture sector in Pakistan’s GDP is around 19 percent but the country’s agriculture relies on inefficient techniques which are intensifying the environmental challenges in the country.
The State Bank of Pakistan had issued Green banking Guidelines in 2017 with the aim to guide banks to “fulfill their responsibilities for the protection of the environment and provide finance to transform the economy into a resource-efficient and climate-resilient one.” But so far Green Financing in Pakistan has received a limited response and is well short of achieving the desired results
In 2019-2020, the share of development loans in agriculture finance, across the country, was only 6.7 percent. Historically, the policymakers in Pakistan set short-term policies and have exploited the lack of awareness regarding sustainability issues in society.
Unfortunately, Pakistan is one of the most vulnerable countries to climate change and heavily relies on external sources to tackle it. The country is already relying on foreign sources to address public health and water security challenges.
In recent years, Pakistan has increased its efforts to combat climate change and environmental degradation, but the economy is still largely driven by outdated practices. The private and informal sectors remain largely neglectful.
Hence our initiatives of Green Pak, 10 bn-tree tsunami, nature based solutions, cleaning up our rivers etc. We have gained vast experience in 7 yrs, beg with KP, & our policies are being recognised & lauded. We are ready to help any state wanting to learn from our experience.
— Imran Khan (@ImranKhanPTI) April 3, 2021
Read more: Climate Change: Is Pakistan doing enough?
Securing financing in the future would, with the growth of new concepts as mentioned above, will not only require environmental consideration but also achieving other SDGs such as ‘quality education’ and ‘decent work’. These goals aim to tackle the issues of forced and child labor.
Pakistan has repeatedly faced economic backlash due to the prevalence of child labor and it is very likely that the country will face stricter actions in the future if it does not comply with SDGs in these areas. The world now increasingly understands that when children are trapped in labor, their physical and personal development is compromised. But according to UNICEF, 22.8 million children aged 5-16 still do not attend school in Pakistan.
Those who are engaged in labor face harsh conditions and poor prospects of growth. After growing international and domestic pressure, the authorities in Pakistan in, recent years, moved to abolish child labor in the country but so far there has been limited enforcement of policies.
Poor Implementation and Governance failures?
Poor implementation overall has been a serious challenge for Pakistan and if the governance system is not reformed then the country will further lose out on future development opportunities.
There is an urgent need to introduce policy reforms that can help Pakistan steer away from environmental and social challenges. Without putting policies into action, the financial burden will only increase in the future.
Addressing future challenges requires a collective approach and Public-Private Partnerships (PPPs) can lead to shared responsibility and more efficient implementation. PPPs are also essential for finding innovative solutions to address modern-day challenges.
A report published by Norden, a platform of Council of Nordic countries in Europe to address climate changes, stresses that climate finance needs are considerable and the coordinated efforts of public and private organizations are urgently required.
Pakistan’s Ecosystem Restoration Fund
Notwithstanding these failures and challenges, with proper mechanisms, there is plenty of potentials to pursue sustainable projects in Pakistan. The country is currently aiming for a green recovery from the pandemic and is pursuing the “Ecosystem Restoration Fund”. This fund covers afforestation, conversing biodiversity, ecotourism promotion, water management, blue economy, and introduction of electric vehicles.
According to Malik Amin Aslam Khan, Advisor to Prime Minister of Pakistan on Climate Change, “Ecosystem Restoration Fund was launched to allow willing partners to credibly and transparently join Pakistan’s green recovery.
Substantial support funds of $180 million have been secured through multi-lateral partners that if the right plan is in place with full ownership, the funds can always be generated.”
Stakeholder engagement in the sustainable financing model, as argued above in this piece, will make the process more transparent which will complement Pakistan’s recent efforts to regulate its financial system as per Financial Action Task Force (FATF) requirements.
Author, Ali Haider Saleem has worked with the Institute of Strategic Studies Islamabad (ISSI) and National Defense University (NDU). His research interests lie in sustainable development, regional integration, and security cooperation. He has studied public policy at Queen Mary University of London and economics at NUST, Islamabad. The views expressed in the article are the author’s own and do not necessarily reflect the editorial policy of Global Village Space.