IFC, SBP to boost green banking

KARACHI: International Finance Corporation (IFC), the World Bank's private sector investment arm and the State Bank of Pakistan (SBP) on Wednesday signed an advisory agreement to support green banking in Pakistan, part of IFC’s commitment to helping countries transition to green, low carbon, sustainable economies.

The IFC’s advisory services team will assist the SBP and Pakistan’s banking sector in improving their environmental risk management practices, and ensuring ethical lending practices.

SBP has already taken an initial step towards this with the issue of its green banking guidelines last October.

“Green banking is vital to reduce the vulnerability of the financial sector to environmental risks and provide financing to make economies more resource-efficient and climate resilient,” said Nadeem Siddiqui, IFC’s senior manager for Pakistan. “Our aim is to leverage our global experience to assist Pakistan’s State Bank build the capacity of the banking sector in green banking practices.”

IFC is a global leader in green banking, providing both advisory and investment support to financial sector regulators and intermediaries on building their green banking business. Over the last two decades, IFC has worked on more than 200 projects with 150 financial institutions in 15 countries, and provided nearly $5.7 billion in financing, including developing green banking business models and issuing green bonds.

The SBP is also part of the IFC-supported Sustainable Banking Network, a global community of financial sector regulatory agencies and banking associations from emerging markets committed to advancing sustainable finance in line with international best practices. Pakistan is a priority country for IFC. Over the last three years, IFC has ramped up its investments and advisory services work in the country with current investment commitments of $1.2 billion to support the development of Pakistan’s private sector, especially in power and infrastructure, and boost access to finance for micro, small and medium enterprises.