Pakistani Banks Score Poorly in Climate Protection Assessment, Revealing Accountability Gaps

Pakistani Banks Struggle with Climate Protection Policies

A recent evaluation has uncovered that the average score for climate protection policies among seven major Pakistani commercial banks is a mere 1.12 out of 10. This concerning statistic highlights a significant disparity between the banks' sustainability commitments and the actual safeguards implemented in their financing activities. Fair Finance Pakistan has conducted this study, which was released on October 13, 2026, and criticized the banks for their inadequate environmental responsibility.

The study assessed several prominent banks, including Allied Bank, HBL, MCB, Meezan Bank, National Bank of Pakistan, Standard Chartered Pakistan, and UBL, utilizing the methodology from the Fair Finance Guide International. Alarmingly, no bank managed to achieve even 42% of the total possible score, indicating rampant negligence towards environmental regulations.

Among the findings, MCB and the National Bank of Pakistan received zero points for biodiversity protection. Other banks fared only slightly better, with UBL scoring 0.94 points, and HBL and Meezan each attaining 1.25 points. Standard Chartered Pakistan offered a slightly higher score of 5.31 points, while Allied Bank managed 3.05 points, underscoring the potential for more robust commitments within the Pakistani banking sector.

Asim Jaffry, Country Program Lead at Fair Finance Pakistan, emphasized the role of banks in ensuring accountability from their borrowers, stating, “Their boards must also apply this discipline to the ecological and social impacts of their financing.” He argued that sustainability declarations cannot compensate for inadequate credit safety measures and that communities require clean air, protected ecosystems, and enforceable customer demands.

The national climate agenda set forth in Pakistan’s NDC 3.0 heavily relies on financing for its implementation, yet the current metrics do not guarantee that bank financing adequately supports this mandate. The international commitments made for biodiversity protection compel governments to ensure that large companies and financial institutions evaluate and disclose their risks, dependencies, and impacts on nature.

The study's results solely reflect publicly available policies and do not account for environmental damages resultant from individual loans, highlighting a weakness in standards that can hold banks accountable. Additionally, the climate risk framework provided by the State Bank of Pakistan in December 2025 mandated that by September 2026, approved implementation plans by the boards must be in place, with full compliance required by June 2029.

Fair Finance Pakistan calls on bank boards to publish implementation milestones that would enhance biodiversity protection and pollution measures, as well as disclose financed emissions and customer transition requirements. They urge regulators, international investors, and correspondent banks to demand demonstrable progress from these financial institutions.

Huma Iqbal, a policy analyst with Fair Finance Pakistan, stated that the real test lies in whether more stringent policies will alter financing decisions and hold banks publicly accountable for implementing these policies within clear and verifiable timelines.

The assessment serves as a clarion call for the banking sector in Pakistan to urgently enhance their practices towards sustainability and accountability and effectively mitigate their environmental impact which remains critical for the nation’s overall ecological health.