KARACHI, JAN 31 /DNA/ – A high-level panel session titled “Decentralizing Climate Action: Unlocking Local Governments’ Role in Climate Finance” was held on Saturday at the Institute of Business Administration (IBA), Karachi, as part of Day 3 of Climate Week Karachi (CWK). The session was 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 discussion brought together leading policymakers, economists, governance experts, academics, and climate finance specialists to examine how climate action can be strengthened by empowering local governments and improving access to climate finance at the city and district levels.

Distinguished panelists included:

• Khurram Schehzad, Advisor to the Finance Minister
• Khalid Waleed, Sustainable Development Policy Institute
• Kashif Ali, Transparency International Pakistan
• Zubair Channa, Secretary, Sindh Environment
• Ali Tauqeer Sheikh, Climate Finance Expert
• Imtiaz Bhatti, Director General, Provincial Ombudsman’s Secretariat, Karachi
• Prof. Lubna Naz, Director, Centre for Business and Economic Research, IBA
• Sahar Arshad, Assistant Professor, IBA
• Shahid Javed, Economist, State Bank of Pakistan
• Naveed Bhutto, Maternal & Child Nutrition Expert, Technical Lead Public Health (NUSP, Sindh), supported by the World Bank

Khurram Schehzad, Advisor to the Finance Minister, emphasized the urgency of shifting climate governance and climate finance closer to the communities most exposed to climate risks. He noted that while global climate discourse often focuses on pledges and frameworks, climate resilience is ultimately built through execution, access to finance, and delivery at the local level.

He highlighted that Pakistan’s climate response must move beyond strategy documents toward practical, scalable financing mechanisms that enable households, farmers, MSMEs, and local governments to invest in resilience.

Drawing on recent federal initiatives, he pointed to five critical access-to-finance pathways for climate resilience:
(i) climate-smart agricultural finance for smallholders through digital, collateral-free lending;

(ii) household and MSME energy transition finance, including electric mobility, energy-efficient appliances, and distributed solarization;
(iii) affordable, climate-resilient housing finance to reduce vulnerability to floods and heat stress;

(iv) outcomes-linked and results-based financing instruments, such as social and skills impact bonds, to crowd in private capital; and

(v) risk-sharing and digital public infrastructure to de-risk banks and accelerate last-mile climate investment.

The panel highlighted a clear and unified message: local governments are not peripheral to climate action – they are central to it. Climate impacts are experienced locally, and resilience must be built within cities, districts, and communities.

Three key priorities emerged from the discussion:

Empowering Local Administrations:

Panelists stressed the need for institutional frameworks that enable capable local governments to directly access climate finance. This includes piloting decentralized approval mechanisms and strengthening the use of localized climate vulnerability data to ensure evidence-based project design.

Bridging Governance and Planning Gaps:

The session addressed structural disconnects between local needs, provincial planning, and national climate commitments. Participants emphasized reforming planning tools – particularly simplifying the PC-1 process for small-scale climate adaptation projects – to ensure community-focused initiatives can be implemented efficiently.

Transforming Governance Reform into Bankable Action:

Speakers discussed the importance of innovative financing instruments, including the National Climate Resilience Fund, blended finance windows, and Nature-Based Solutions such as the Sindh Coastal Resilience Bond and mangrove-linked carbon credits. De-risking private investment was highlighted as essential to mobilizing commercial finance at the community level.

The discussion also underscored two pressing challenges that must be integrated into Pakistan’s climate finance roadmap. First, the rapid, organic shift toward solarization requires structured de-risking mechanisms so local governments can support community solar grids and ensure equitable access to clean energy. Second, climate finance frameworks must include rapid-response liquidity to enable local administrations to access emergency funds during floods, heatwaves, and other extreme weather events.

The role of academia was recognized as critical in advancing this agenda. IBA Karachi, through the Centre for Business and Economic Research (CBER), reaffirmed its commitment to supporting evidence-based policymaking by translating dialogue into actionable research, refined concept notes, and policy-relevant outputs.

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