Pakistan will need an estimated $565.7 billion in climate-related investment by 2035 to achieve its latest commitments under Nationally Determined Contributions (NDC) 3.0, underscoring the magnitude of financing required to reduce emissions, scale renewable energy, and strengthen climate resilience in one of the world’s most climate-exposed economies.

The figure was shared at a session hosted by the Overseas Investors Chamber of Commerce and Industry (OICCI), where participants examined how initiatives such as the Pakistan Green Taxonomy (PGT) and enhanced Environmental, Social and Governance (ESG) reporting can help mobilize domestic and international capital for climate-aligned projects, according to a press statement.

The discussion took place following the Securities and Exchange Commission of Pakistan’s (SECP) alignment of its revised ESG Disclosure Guidelines with the Pakistan Green Taxonomy—an effort aimed at improving sustainability reporting, comparability, and investor transparency across listed entities.

Under NDC 3.0, Pakistan has pledged to reduce greenhouse gas emissions by 17% unconditionally and 33% conditionally, increase electric vehicle penetration to 30%, and raise the share of renewable energy to 60% in the national mix.

Meeting these targets will hinge on access to concessional climate finance, blended capital, and a significant role for the private sector.

Introduced by the State Bank of Pakistan in 2024, the Pakistan Green Taxonomy provides a common classification system to identify environmentally sustainable economic activities, covering areas such as climate mitigation, water resource efficiency, ecosystem restoration, pollution control, circular economy practices, and sustainable land use. The framework is designed to help banks, investors, and corporations align financial decisions with low-carbon and climate-resilient objectives.

Meanwhile, the SECP’s ESG Disclosure Guidelines establish standardized metrics for financial and non-financial reporting. Although voluntary at present, these disclosures are expected to move toward mandatory compliance between 2029 and 2031, increasing corporate reporting obligations and strengthening investor due diligence.

Experts noted that better alignment between taxonomy principles and credible ESG reporting could improve Pakistan’s access to international climate finance platforms, reduce the cost of capital for compliant companies, and enhance investor confidence at a time when global funds are increasingly tied to sustainability criteria.

The session also addressed technical considerations such as “substantial contribution” criteria, “do no significant harm” safeguards, and minimum social standards, as well as relevant global reporting frameworks including GRI, ISSB, and TCFD. These tools are seen as essential for preventing greenwashing and integrating Pakistan’s markets into the global sustainable finance ecosystem.

For Pakistan’s financial sector and capital markets, the $565.7 billion financing requirement signals both a sizable challenge and a strategic opportunity, as climate-related investment becomes a defining driver of long-term economic transformation.