Pakistan must localize climate finance to strengthen resilience

January 31, 2026 (MLN):  Climate experts and policymakers have called for greater decentralization of climate governance, urging that local governments be empowered with direct access to finance to strengthen resilience at the community level.

The appeal came during a high-level panel session titled “Decentralizing Climate Action: Unlocking Local Governments’ Role in Climate Finance,” held at the Institute of Business Administration (IBA), Karachi, as part of Day 3 of Climate Week Karachi (CWK).

Jointly organized by the Centre for Business and Economic Research (CBER), IBA, and Transparency International Pakistan with support from the Climate Action Center (CAC), the session focused on how shifting financial authority closer to cities and districts can accelerate climate adaptation and improve on-ground implementation, according to a press release issued.

Distinguished panelists included Khurram Schehzad, Advisor to the Finance Minister; Khalid Waleed of the Sustainable Development Policy Institute; Kashif Ali from Transparency International Pakistan; Zubair Channa, Secretary, Sindh Environment; climate finance expert Ali Tauqeer Sheikh; Imtiaz Bhatti, Director General at the Provincial Ombudsman’s Secretariat, Karachi; Prof. Lubna Naz, Director CBER-IBA; Sahar Arshad, Assistant Professor at IBA; Shahid Javed, economist at the State Bank of Pakistan; and Naveed Bhutto, Maternal and Child Nutrition Expert and Technical Lead Public Health (NUSP, Sindh), supported by the World Bank.

Khurram Schehzad stressed the urgency of relocating climate governance and finance closer to communities most vulnerable to climate risks. He observed that while international discussions often revolve around pledges and frameworks, real resilience depends on execution, financial access, and last-mile delivery.

He added that Pakistan must move beyond strategy papers toward scalable financing solutions enabling households, farmers, micro, small and medium enterprises (MSMEs), and local governments to invest in resilience.

Highlighting recent federal initiatives, Khurram Schehzad outlined five priority pathways for expanding access to climate finance.

Climate-smart agricultural lending for smallholders through digital, collateral-free models; financing for household and MSME energy transition including electric mobility, efficient appliances, and distributed solarization; affordable climate-resilient housing; outcomes- and results-based instruments such as social and skills impact bonds to attract private capital; and risk-sharing mechanisms supported by digital public infrastructure to reduce banking sector exposure and accelerate investment.

The discussion identified three major priorities for strengthening localized climate action.

Panelists called for institutional frameworks that allow capable local administrations to directly access climate funds, including decentralized approval systems and stronger use of localized vulnerability data for evidence-based planning.

Participants also pointed to structural gaps between community needs, provincial planning, and national commitments, recommending reforms to planning tools particularly simplifying the PC-1 process to ensure small-scale adaptation projects can be implemented more efficiently.

Emphasis was also placed on converting governance reforms into bankable opportunities through innovative instruments such as the National Climate Resilience Fund, blended finance windows, and Nature-Based Solutions, including the proposed Sindh Coastal Resilience Bond and mangrove-linked carbon credits.

De-risking private investment was described as critical to mobilizing commercial finance for community-level projects.

The panel further highlighted two urgent challenges for Pakistan’s climate finance roadmap.

The rapid, largely organic transition toward solar energy requires structured de-risking mechanisms so local governments can support community solar grids while ensuring equitable access.

Additionally, speakers stressed the need for rapid-response liquidity frameworks to enable local administrations to access emergency funding during floods, heatwaves, and other extreme weather events.

The role of academia was also highlighted, with IBA Karachi through CBER  reaffirming its commitment to advancing evidence-based policymaking by converting dialogue into actionable research, refined concept notes, and policy-relevant outputs.

The session concluded with a call for sustained collaboration among government institutions, academia, civil society, and development partners to promote locally driven, execution-focused, and finance-enabled climate action across Pakistan.

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