Staff Reporter
Pakistan’s major commercial banks have made stronger publicly disclosed sustainability commitments for their own operations, but these commitments are largely missing from the lending policies governing the companies and projects they finance, according to a new assessment of seven banks.
The study, released by Fair Finance Pakistan in collaboration with the Lahore University of Management Sciences (LUMS) and research partner Profundo, found that 75.4 per cent of assessment elements relating to banks’ own operations received a positive basic policy score, compared with just 23.1 per cent for borrowers and projects financed by them.
The findings raise concerns about the extent to which climate change, biodiversity loss and other environmental and social risks are incorporated into lending decisions in a country increasingly exposed to floods, extreme heat and air pollution.
Titled Benchmarking the Sustainability Policies of Banks in Pakistan: A Policy Assessment of Seven Major Commercial Banks, the report is the second national assessment of sustainability policies in the country’s banking sector. It was launched during the World Bank-IMF annual meetings in Thailand.
The assessment covered Habib Bank Limited (HBL), United Bank Limited (UBL), MCB Bank, National Bank of Pakistan (NBP), Meezan Bank, Allied Bank and Standard Chartered Pakistan. Their publicly disclosed policies for 2025 were evaluated under eight themes: biodiversity, climate change, corruption, gender equality, human rights, labour rights, taxes, and transparency and accountability.
The findings showed particularly weak policy coverage for environmental issues in financing decisions. Positive financing-facing policy coverage stood at just 13.8 per cent for climate change and 26.8 per cent for biodiversity. The corresponding figures were 14.3 per cent each for corruption and gender equality, 17.3 per cent for human rights and 5.7 per cent for tax.
On a scale of zero to 10, the sector’s average score was 1.12 for climate change and 1.69 for biodiversity, making them the lowest-scoring themes in the assessment.
Standard Chartered Pakistan recorded a climate-change score of 3.63, followed by Allied Bank at 1.45 and HBL at 1.37. The remaining banks scored below 0.50, with NBP at 0.48, UBL and Meezan Bank at 0.32 each, and MCB Bank at 0.24.
Biodiversity scores also varied considerably. Standard Chartered Pakistan scored 5.31 and Allied Bank 3.05, while HBL and Meezan Bank recorded 1.25 each and UBL 0.94. MCB Bank and NBP scored zero in this category.
Presenting the findings, Dr Abid Aman Burki, Professor Emeritus of Economics at LUMS, said environmental policy remained the weakest dimension, with climate and biodiversity scores barely exceeding one out of 10.
Allied Bank recorded an aggregate score equivalent to 41.05 per cent of the maximum attainable points, followed by Standard Chartered Pakistan at 34.28 per cent and HBL at 32.90 per cent. Meezan Bank scored 28.96 per cent, MCB Bank 22.95 per cent, UBL 18.88 per cent and NBP 16.94 per cent. Allied Bank’s comparatively broad commitments covered governance and labour rights, while Standard Chartered led in climate change and biodiversity. HBL recorded the highest gender-equality score.
Speaking at the launch, Asim Jaffry, Country Program Lead at Fair Finance Pakistan, said banks’ responsibilities should extend beyond their balance sheets to the environmental conditions affecting communities.
“We share the need to breathe, but not equal protection from polluted air — and finance must change that by giving clean air, human rights and biodiversity real weight in credit decisions,” he said.
Bushra Shafique, Head of the Banking Policy and Regulations Department at the State Bank of Pakistan, said the regulator was working to move banks from voluntary commitments towards implementation through its Green Taxonomy pilot and climate-risk principles introduced in 2025.
She said the measures were intended to integrate climate risks into banks’ governance, strategies and lending decisions, adding that stronger and more measurable results were expected as banks embedded the requirements over the next three years.
Mukhtar Ahmad Ali, Executive Director of the Centre for Peace and Development Initiatives and former Punjab Information Commissioner, stressed the importance of transparency, urging banks to disclose their policies and demonstrate how consistently they were implemented.
Citing Article 19A of the Constitution, which guarantees access to information on matters of public importance, he said public trust depended on transparency and disclosure.
Mir Shai Mazar Baloch, Director General of the Pakistan Institute for Parliamentary Services, highlighted the role of parliamentary oversight in making sustainability commitments enforceable. Hussain Jarwar, chief executive of the Indus Consortium, called for meaningful consultation and effective grievance mechanisms for communities living near projects financed by banks.
Dr Renz Prudenciado of the Asian Institute of Technology in Thailand said monitoring should also capture the gender-related and social impacts of pollution and climate change. Albrecht Arevalo of the Global Alliance for Incinerator Alternatives urged banks to establish lending conditions that exclude harmful approaches, including waste-to-energy incineration projects that could increase emissions or adversely affect waste workers.
The report recommends that commercial banks extend environmental and social safeguards consistently across corporate lending and project finance, particularly in climate change, biodiversity, human rights and gender equality.
It also calls on the State Bank to strengthen supervision and align its Environmental and Social Risk Management framework, climate-risk rules and Green Taxonomy, alongside comparable disclosure requirements.
The report cautions that its findings measure the quality and scope of banks’ publicly disclosed sustainability policies, rather than the actual environmental or social outcomes of their lending portfolios.
