Prescription for green banking adoption in Pakistan

Pakistan's green transformation journey needs to be based on holistic collaboration across all economic sectors for the development of integrated, affordable and sustainable environmental solutions.

Escalation of Commitment is a concept in which an individual or an organization remain committed to certain behaviors or policies even in the presence of strong evidence suggesting the presence of various shortcomings or negative consequences associated with their continuation. Unfortunately, this can be frequently observed in various public sector strategic decision making in Pakistan. Instead of taking a cyclical approach towards planning, one which involves a 'review & revise' phase, various public sector policies in Pakistan are trapped in a spiral of commitment bias.

It does not necessarily mean that the strategies are inherently wrong rather certain problems may exist in the planning or execution phase which can be corrected with timely intervention. A need exists for the formation of SMART strategies, i.e. Specific, Measurable, Accessible, Realistic, and Time-frame bounded. Policy making needs to be evaluated and revised or re-planned after specified time intervals based upon the implementation outcomes.

These strategic planning principles hold true for implementation of environmental sustainability policies as well. Pakistan's banking industry can play a pivotal role in this journey through the ideology of Green Banking. It is the elixir required for the development and growth of green industrialization and urbanization in Pakistan. The State Bank of Pakistan (SBP) launched the Green Banking Guidelines in 2017 as a set of voluntary initiatives for the banks and DFIs.

In the Green Banking guidelines, the SBP has directed the banks to setup Green Banking Office which will be operated by existing bank staff being assigned the additional duties of Green Banking adoption except the Green Banking Officer.

This is one of the main issues in the guideline that should be revisited and revised due to the advancement in Green Banking implementation in Pakistan. At this stage, SBP should move towards the formation of a full-fledged Green Banking Department/Division with dedicated staff having expertise and knowledge in the respective area.