KARACHI: Pakistan’s major commercial banks have made limited progress in extending sustainability commitments to the businesses and projects they finance, with climate change and biodiversity emerging as the weakest areas in a new assessment of the sector.

The 2025 Benchmark of Bank Sustainability Policies in Pakistan, released by Fair Finance Pakistan (FFP) on the sidelines of the World Bank-IMF Annual Meetings in Bangkok, found that positive policy coverage for borrowers and projects stood at just 13.8 per cent for climate change and 26.8pc for biodiversity.

Conducted in collaboration with Lahore University of Management Sciences (Lums) and Profundo, the assessment of seven banks — Habib Bank Ltd (HBL), United Bank Ltd (UBL), MCB Bank, the National Bank of Pakistan (NBP), Meezan Bank, Allied Bank (ABL) and Standard Chartered Pakistan (SCBPL) — found that 75.4pc of the policy elements relating to their own operations received a positive basic score, compared with only 23.1pc for the companies and projects they finance.

Standard Chartered Pakistan recorded the highest climate-change score at 3.63 out of 10, followed by Allied Bank at 1.45 and Habib Bank Ltd at 1.37. The remaining banks scored below 0.50. Biodiversity scores showed a similar concentration of stronger commitments among a few lenders. Standard Chartered led with 5.31, followed by Allied Bank at 3.05, while MCB Bank and the National Bank of Pakistan scored zero.

Across the eight themes assessed, governance-related policies, covering anti-corruption, tax transparency, and accountability, performed best, with a sector average of 3.39. Social themes averaged 3.14, while environmental policies trailed at 1.40.

Presenting the findings, Lums Professor Emeritus of Economics Dr Abid Aman Burki said environmental policies remained the weakest dimension, with climate and biodiversity scores barely above one out of 10.

Allied Bank topped the overall assessment, scoring 41.05pc of the maximum attainable, followed by Standard Chartered Pakistan at 34.28pc and HBL at 32.90pc. Meezan Bank scored 28.96pc, MCB Bank 22.95pc, United Bank Ltd 18.88pc and NBP 16.94pc. No bank crossed 42pc.

FFP’s Country Programme Lead Asim Jaffry said lending decisions influenced which industries and projects were developed, with consequences for air quality, human rights and natural habitats.

The findings come as the State Bank of Pakistan advances its Green Taxonomy and climate-related financial-risk framework alongside existing Green Banking Guidelines and environmental and social risk management requirements.

SBP’s banking policy and regulations department head Bushra Shafique said banks were being moved from voluntary commitments towards implementation, with climate risks expected to be integrated into governance, strategy and lending decisions over the next three years. The report recommends stronger borrower obligations, independent monitoring, greater portfolio-level disclosure and consistent environmental and social safeguards in credit appraisal.

It cautions that the assessment measures the quality and scope of publicly disclosed policies, rather than actual environmental or social outcomes. Nevertheless, the gaps raise concerns about whether climate and nature-related risks are adequately reflected in financing decisions in a country increasingly exposed to floods, extreme heat and air pollution.

Published in Dawn, October 14th, 2026