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Green financing in Pakistan’s transportation

and the EV Policy (2020) mention sustainability resources. Furthermore, weak cross-sector collaboration
but lack structured financial mechanisms to support among government agencies, financial institutions,
investments. In addition, slow bureaucratic processes, and private investors prevents the establishment of
unclear eligibility criteria, and a lack of inter-agency effective green finance models such as PPPs. Without
coordination contribute to policy misalignment, strong institutional coordination and knowledge-
delaying financial approvals and increasing project sharing mechanisms, green financing initiatives remain
costs. This theme is supported by the perspectives of fragmented and difficult to scale. This theme is supported
interviewees as follows: by the perspectives of interviewees as follows:
“The absence of green finance clauses in most “There is a significant knowledge gap among
national policies indicates a lack of foresight in policymakers and financial institutions regarding
addressing sustainability.” (BI, oral communication, the structuring of green finance projects.” (DB,
[April] [11], [2024]) oral communication, [June] [12], [2024])
“Disjointed policies between federal and provincial “Capacity-building initiatives should target
governments create barriers to implementing green both public and private sector actors to ensure a
finance effectively.” (HJ, oral communication, comprehensive understanding of green finance.”
[July] [29], [2024]) (BI, oral communication, [May] [11], [2024])
“Stakeholders are in a state of confusion due to “Training programs tailored to local contexts
policy gaps, and there is no uniform framework can bridge the knowledge gap and empower
regarding green finance initiatives.” (MI, oral stakeholders to effectively utilize green finance
communication, [May] [15], [2024]) mechanisms.” (HJ, oral communication, [June]
“The bureaucracy involved in approving [14], [2024])
green finance projects is characterized by long “Green finance requires a multi-stakeholder
delays, which discourages investors.” (AK, oral approach, but in Pakistan, the lack of coordination
communication, [June] [16], [2024]) between government agencies, private sector actors,
“Due to a lack of clear and consistent policies, and civil society remains a major challenge.” (YD,
it is difficult to align green finance projects with oral communication, [April] [1], [2024])
international funding requirements.” (BI, oral “Creating platforms for cross-sector dialogue could
communication, [June] [15], [2024]) foster better collaboration and lead to more effective
implementation of green finance initiatives.” (MI,
4.1.3. Institutional gaps oral communication, [June] [1], [2024])
Several key institutions – including the SBP, Planning
Commission, Ministry of Communications, and 4.2. Theme 2: Policy integration
commercial banks – lack the technical capacity to design, A well-defined policy framework is essential for
assess, and monitor green transport projects. For instance, integrating green finance into sustainable transportation
the SBP’s green banking guidelines, though introduced initiatives. However, Pakistan lacks a cohesive policy
in 2017, are not fully integrated into mainstream lending structure that effectively aligns financial incentives,
practices. The Planning Commission’s Public Sector regulatory mandates, and sustainability objectives.
Development Program also lacks a dedicated screening Existing policies provide general direction but fail
process for environmental or low-carbon criteria. Most to establish a comprehensive mechanism for green
local banks and development finance institutions do not financing in the transport sector. The misalignment
have green finance divisions or climate risk analysts. between national and provincial policies, coupled with
This results in limited pipeline development, poor inadequate financial incentives, creates significant
project structuring, and misalignment with international barriers to investment. Strengthening policy integration
investment requirements. Institutional coordination can enhance financial accessibility, regulatory clarity,
between ministries and financial regulators is also and long-term sustainability in green transportation
weak, leading to fragmented efforts and underutilization projects.
of global funding windows. Without institutional
reform and capacity enhancement, scaling up green 4.2.1. Embedding green finance in policies
transport finance will remain a significant challenge. Green finance needs to be institutionalized within
The absence of capacity-building programs results in national and local transport strategies to ensure
low awareness and inefficient allocation of financial consistent implementation. However, the absence of

Volume 22 Issue 4 (2025) 117 doi: 10.36922/AJWEP025160121