Environmental Protection

The Path towards Sustainability

Last year in March, the United Nations issued its assessment of the global environment in the form of the sixth Global Environmental Outlook, a 708-page compendium of the planet’s ailments. The scientific team that conducted the assessment warned that the Earth’s condition has continued to deteriorate since the first global outlook was prepared in 1997 and “urgent action at an unprecedented scale is necessary to arrest and reverse this situation.” Joyce Msuya, acting executive director of U.N. Environment, said, “The planet stands at a crossroads: the Earth’s ailments are treatable, but not for a lot longer if people don’t make fundamental changes in what they consume, how they create energy, dispose of waste, and generally decrease the human footprint that is degrading air, water, and land.”

 

The traditional means and methods used to achieve ambitious economic goals driven by profit maximisation, particularly in emerging economies, is simply not ecologically sustainable. Climate change is no longer an approaching threat; it has become a real one, resulting in climate-induced disasters such as floods, droughts, earthquakes, hurricanes, severe rainfalls, wildfires, haze, typhoons and extreme hot and cold weathers at a scale and scope the world has never seen before. The urgency of environmental protection has become so intense that the United Nations secretary remarked in his speech at the 2018 Climate Change Conference that it has become an issue of life and death for humans, regions and countries.

Consequently, the United Nations initiated the United Nations Environmental Programme to identify policy options to ensure environmental targets set forth under the Paris Agreement and the Kyoto Protocol are met. The G20 created the Green Finance Study Group for the promotion of green investment among member countries and the International Finance Corporation, in coordination with the World Bank Group, established the Sustainable Banking Network (SBN) to provide a platform to financial regulators of emerging countries, including Pakistan. Their purpose is the development of methods to mobilise capital to achieve national green and sustainable development targets.

In this context, environmental statistics shows that Pakistan is highly prone to climate change, wreaking havoc on people’s livelihoods and causing fatalities. Pakistan was nearly at the bottom, ranking 169 out of 180 countries on the Environmental Performance Index presented at the World Economic Forum 2018, which was based on the progress of 24 indicators related to ecosystem health and vitality.

Likewise, Pakistan was among the top ten worst performing economies in the Country Sustainability Ranking 2019, which is developed by RobecoSAM and is based on a nation’s progress in environmental, social and governance management. As per the global climate risk index 2020, prepared by GermanWatch, Pakistan is declared the 5th most affected country by climate-triggered catastrophes during 1999-2018, resulting in a number of human fatalities and economic damages worth $3.793 billion.

Therefore, following global initiatives, the State Bank of Pakistan (SBP) issued Green Banking Guidelines (GBGs) in 2017 to provide technical guidelines to financial institutions for risk management to reduce vulnerabilities stemming from a project’s environmental risk exposure and to scale up green investment in Pakistan.

 

Green finance refers to the funding of investment projects that have sustainably positive environmental, social and economic impacts. Pakistan has abundant green opportunities in areas such as renewable energy, resource recycling, climate-smart agricultural production, clean transport green buildings, sustainable water and land management and hence is ripe for an advanced green financial market in Asia.

However, it faces a range of market, institutional and policy barriers that prevent scaling up of green capital flows. Availability of green capital is a key enabler to realise the multiple targets set under the United Nation’s Sustainable Development Goals and the agenda of Pakistan’s national vision 2025.

Concerning Pakistan’s policy progress on the promotion of green finance, SBN reports provide meaningful insights. Since 2018, the SBN has been using a progressive matrix (PM) to track the progress of member countries on green-policy adoption and actions.

The PM is based on three developmental stages — preparation, implementation and maturing — and each stage is split into two sub-stages. Pakistan is positioned at the developing phase of the implementation stage on SBN’s progression matrix in

That matrix further highlighted that only China and Indonesia have reached the initial sub-stage of the maturing phase in the development cycle.

Though Pakistan has shown slight progress on developing the culture of green investment, it is still lagging behind other emerging Asian countries such as Bangladesh, Indonesia, Vietnam and Mongolia. After the development of green policy guidelines, the next step for the SBP is to chalk out regulatory and industry-led policy interventions for bringing about behavioural change among top financial managers working in the banking sector.

The establishment of monitoring and supervisory mechanisms to ensure systematic implementation of GBGs, initiation of a regime of mandatory reporting of green investment portfolios in annual reports, launching specially designed training and development programmes to enhance capacity building of banking staff to enable them to carry out credit risk analysis in conjunction with environmental and social risks inherently associated with each green investment project are all essential aspects.

And finally, banks should be encouraged to adopt the successful green methodological approaches of Asian countries, particularly China and Indonesia, which are currently at the mature stage of the green market.

These bank-centred recommendations are made on the factual estimation in the SBN report 2019 that emerging economies require a funding of $70 trillion by 2030 to achieve sustainable development projects that are in line with their national priorities. Banks operating in emerging economies held assets worth $50tr by June 2018, signalling that banks have great leverage in determining the pace at which conventional emerging economy transitions into a resource-efficient and climate-resilient one.

Global Environmental Outlook 6

Key findings on Asia and the Pacific

The analysis of key environmental themes on air, land, biota and ecosystems, freshwater, coasts and oceans, and waste using drivers-pressures-state-impact-response (DPSIR) framework shows accelerating environmental degradation widely across the region and its impact on human well-being. Key findings of the Assessment are:

Air

Sulphur dioxide and nitrogen oxide emissions have reduced, but ambient concentrations of ozone and fine particles (shortlived climate pollutants (SLCPs) such as black carbon) have continued to increase. Trans-boundary smoke haze pollution, due to open biomass burning and improper land-use practices, is becoming the key regional air quality problem in Southeast Asia, and highlights the urgency of multilateral solutions and regional cooperation. Indoor air pollution from burning poor quality fuels or biomass, impacts women and children throughout the region contributing to health effects. Climate change impacts on cities and infrastructure are intensified in some coastal zones and Pacific island countries, while extreme climate events are becoming the major cause of disasters in the region.

Land

Land degradation has been intensified over most of the region, with consequent displacement of indigenous people, loss of biodiversity, and reduction in important forest products. Land degradation has additional implications for water resources in terms of soil water content and groundwater recharge. The total forest area has increased in some areas of Asia since 1990 due to reforestation efforts, but there are significant sub-regional differences. Meanwhile, there is continuous loss of wilderness, natural forest systems, mangroves and other natural systems to croplands and urban growth.

Biota and ecosystems

Ecosystems integrity and biodiversity are threatened throughout the region due to extensive agriculture, oil palm and rubber plantations, aquaculture and illegal wildlife trade. Natural forest areas in Southeast Asia and the Pacific, recognized as global biodiversity hotspots, declined drastically in 1990–2015. The number of threatened mammal and plant species increased by more than 10 and 18 per cent respectively in the last decade. Three-quarters of all threatened birds on oceanic islands are also in danger from invasive species. A quarter of all conifers and cycad species are threatened, as are one fifth of marine mammal species. In the oceanic countries and Small Island States, over 25 per cent of hard warm‐water corals are experiencing bleaching, mainly due to high thermal stress, and are impacted by dumping of plastic debris and micro-plastic hazardous waste in the oceans.

Freshwater

Water scarcity and deteriorating water quality are commonplace throughout the region especially in Northeast and South Asia. As climate change impacts on water resources become more pronounced, particularly in rivers originating in the Hindu Kush Himalayas, flood and drought events will become more frequent and intensified. Contamination of water sources from human and livestock sewage is a major concern across the region; and the widespread contamination of ground water by pharmaceutical and personal care products, nanomaterials, and organochlorides increase the exposure to human health risk, especially for women and young children. Water-related diseases and unsafe water contribute to 1.8 million deaths annually and 24.8 million disabilityadjusted life years in the region.

Coasts and oceans

The coastal zone is inherently attractive for human settlement and continued urbanization draws in greater populations, with 325 million more people expected to live in the coastal zone by 2025. About 60 per cent of the coastal mangroves in Asia and the Pacific have been cleared for development and more than 80 per cent of the coral reefs are at risk. Severe erosion prevails on one-quarter to one-third of the coastlines in Southeast Asia. Pollution caused by plastic debris and microplastics is an increasing concern in the region.

Waste

Municipal solid waste generation is expected to rise from 870 million tonnes in 2014 to 1.4 billion tonnes annually by 2030 in the region. New and complex waste streams like e-waste, food waste, construction/demolition waste, disaster waste and marine litter are emerging. Uncontrolled dumping is still the main waste disposal method in the region, leading to leachate run off, methane emission, spontaneous combustion, and other environmental problems. However, recent emergence of waste to energy investment programs could be further enhanced to provide better waste disposal.