The first rupee-denominated climate finance bond was launched on Saturday at s ceremony where Finance Minister Muhammad Aurangzeb was present. With s Rs 1 billion commitment, the Green Action Band is meant to channel investment from the private sector into renewable energy, clean transport and other green infrastructure projects. It is quoted on the Pakistan Stock Exchange, which means that it will principally be an instrument for banks, insurance companies and mutual funds to channel funds into. It will also be useful to provide the rupee component for projects which have attracted investment in foreign exchange, but which also need a local investment component.
It is perhaps overdue because Pakistan is one of the countries which will be worst affected by climate change, and it seemed counterintuitive that with the proliferation of financial instruments in green finance, none should be rupee-denominated. The new bond is lso another step towards tying in the new field of climate finance to the existing financial architecture. Obviously, any green financing would have o be rooted in the existing financial system, but this also carries certain dangers. First, the existing financial order, the Bretton Woods system set up after World Wr II, is widely unjust, and is designed to keep the underdeveloped countries in line. Climate justice is not just about the industrialized world having caused the pollution which underdeveloped countries suffer the consequences of, but about the fact that these already heavily indebted countries have to borrow more money to fend off the worst damage of climate change.Even as the planet heats up inexorably because the developed countries industrialized through using fossil fuels, thy plan to use the funding of the crisis to tighten their financial control over the countries worst affected by the climate change crisis.
One aspect of the crisis involves the developed countries throwing money at the underdeveloped in the hope that they can thus escape some of the blame. This should stop only if the developing countries were to stop asking for money. Unfortunately, Pakistan is not among them, and while it has launched a green bond, it has also undergone an evaluation for the IMF’s Resilience and Sustainability Facility, which indicates that it will be quite happy with the scraps thrown to it from the table by the developed countries. The bond launch is a hopeful sign, but if it is not used for liberating Pakistan from the trammels of climate finance being thrown around it, it will prove to be part of the problem, not the solution.
