Environmental, social risks: Financial sector must become sensitive to consequences: SBP governor

KARACHI: State Bank of Pakistan (SBP) Governor Jameel Ahmad Wednesday said Pakistan is one of the most vulnerable countries to the impacts of climate change as witnessed during the recent floods; therefore, it is high time Pakistan’s financial sector become sensitive to financial consequences arising out of environmental and social risks.

Addressing the Sustainable Banking Conference, organized by the central bank in collaboration with IFC, a member of the World Bank Group, at a local hotel here, SBP Governor said the conference was an effort to spread awareness on the impact of climate change and environmental degradation on the financial sector of Pakistan and a step towards SBP’s endeavor to reduce the vulnerability of financial sector from such risks.

The objective of the conference was to create critically needed awareness related to climate change and sustainability within the financial sector and launch the Environmental and Social Risk Management (ESRM) Implementation Manual. The inaugural session of the conference was chaired by Governor SBP.

During the conference, the Governor, SBP, launched the ESRM Implementation Manual for banks and DFIs. While delivering the keynote address, Governor SBP remarked that this manual has been launched as part of SBP’s ongoing efforts to promote green banking in Pakistan.

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The ESRM manual is a procedural guide for the banks/DFIs to establish their environmental & social risk management systems, as advised in SBP’s Green Banking Guidelines (GBGs).

The SBP, being a responsible regulator of the financial system, has also undertaken certain initiatives like Green Banking Guidelines and Financing Scheme for Renewable Energy, to ingrain sustainability considerations into the financial sector as per international best practices, Governor SBP said.

Jameel Ahmed encouraged the entire banking industry to take full benefit of the manual to establish their ESRM systems and procedures. State Bank will keep on providing necessary support and guidance at every stage of ESRM implementation.

On the sideline of conference, the Governor SBP talking to media said that LC opening procedure is being eased to facilitate the importers and directives to the banks have been issued.

In the inauguration ceremony, Khawaja Aftab Ahmed, IFC Regional Director for the Middle East, Pakistan and Afghanistan, shared that the launch of the Environmental and Social Risk Management (ESRM) Implementation Manual marks a significant step towards promoting sustainable banking practices in Pakistan.

He said that the manual can help the banking industry better manage environmental and social risks throughout their lending practices, and subsequently, enable a green and inclusive economic recovery at a critical time for Pakistan.

The conference also included two high-level panel discussions on important topics including ESG integration in the financial sector and climate finance risk & climate disclosures wherein, in addition to other senior level experts, two ex-SBP Governors shared their experiences. Deputy Governor Sima Kamil concluded the conference and thanked all participants.

The conference was attended by high profile dignitaries including Zeeshan Ahmed Sheikh Country Manager for Afghanistan and Pakistan, IFC, Toshio Odagiri Consul General of Japan in Karachi, Dr. Shamshad Akhtar Chairperson, PSX Board, Yaseen Anwar Senior Policy Advisor, IFC, Sima Kamil Deputy Governor, SBP, presidents/CEOs of different banks/DFIs, senior officials from Pakistan Banks Association, Sindh Environmental Protection Agency and other relevant stakeholders.

Copyright Business Recorder, 2022