Factors Confronting Green Finance in Pakistan

Abstract

Green financing is a concept that has emerged in response to growing concerns about environmental sustainability & climate change. Like many developing nations, Pakistan is facing significant environmental challenges and the impacts of climate change. In response to these challenges, there exists a need of investing in projects that are sustainable and have a positive influence on the environment. However, despite this growing need, there are significant barriers in adopting and implementing green finance in Pakistan. This research aims to investigate present difficulties & problems faced by the supply side of green finance, which includes a lack of awareness and knowledge, incentives, absence of technological innovation, inadequate attention of regulatory authorities, risk, lack of long-term financing, high costs, and asymmetric information problems. A questionnaire survey was conducted to identify the financing hurdles, by visiting banks in Islamabad Pakistan. The study demonstrate that most variables included in the survey were reliable. The data was then analyzed & conclusions were drawn using factor analysis. As evident from results, lack of awareness & knowledge, absence of technological innovation, inadequate attention of regularity authorities, risk, lack of access to long-term financing and high cost are the major green financing constraints. On the basis of this study, suggestions were proposed, that there is an urgent need for action to address the green financing constraints in Pakistan, in order to promote sustainable development and mitigate the adverse effects of climate change.