CLIMATE change is affecting us all, across the planet. Record-breaking sea and surface temperatures, and associated heatwaves, floods, droughts and other extreme weather events in various parts of the globe in recent years have created awareness about the environmental, social and economic impact of climate change. Countries are seeking to reduce their carbon footprint, promote sustainable practices, impose carbon tariffs or other trade restrictions on goods that do not meet environmental standards, and provide subsidies to support a green transition. Under pressure from their citizens, governments are implementing policies and regulations aimed at mitigating the impact of global warming. Companies too are being influenced by rising consumer consciousness on climate change and asking their overseas suppliers to report their practices that contribute to global warming or mitigate its impact. In the years ahead, international trade is likely to become tougher for countries and firms that do not comply with climate mitigation rules. The objective of such measures is to make trade a major tool for climate action.

This was highlighted by business leaders and climate experts at a recent event, as they pointed out the threat to exports and FDI that Pakistan faces on account of a potential failure to comply with the steps needed to combat climate change as global buyers have linked purchases from Pakistani producers with reporting climate compliance since last October. All producers must adopt reporting practices by 2026. Some large exporters have taken steps to comply and a few have even begun to take action to reduce their carbon footprint. But for most it remains business as usual. Climate action is needed to protect not only industrial exports but also farm commodities. Climate compliance also offers opportunities to attract international green financing of $500bn through marketing climate-friendly projects. Protecting export revenues and securing green finance should be good incentives for Pakistan to take climate action in line with global agreements.

Published in Dawn, August 23rd, 2024