Shift away from fossil fuel-based economy: Akhtar

KARACHI: Pakistan Stock Exchange (PSX) Chair­person Dr Shamshad Akhtar has said the country’s “extreme dependence” on fossil fuels to achieve gro­wth has ruined the environment at a high economic cost.

Speaking at a seminar on the role of business in protecting the environment organised jointly by the Pakistan Institute of Corporate Governance (PICG), Overseas Investors Chamber of Commerce and Indus­try (OICCI) and Unilever Pakistan Ltd, Dr Akhtar said the economic bill of climate change is so huge that accounting for it would double the country’s annual external financing requirements of around $29 billion.

Pakistan is the fifth most vulnerable country in terms of its vulnerability to climate change, according to the Global Climate Risk Index. The OICCI estimates the country has incurred $3.79bn in economic losses in 20 years while losing nearly 10,000 lives to climate-related disasters between 1998 and 2018.

“Growth shouldn’t be achieved recklessly,” she said while criticising the analysts who vehemently call for using coal as a major fuel source on the pretext that the country’s footprint in global carbon emissions is negligible.

“I feel extremely sorry for that statement. Coal is very dangerous,” she said.

She said $1 trillion in financing is needed for 61 debt-distressed economies as they can’t find the resources to tackle climate change on their own as long as their debt problem stays unresolved.

According to the updated Nationally Determined Contributions (NDCs) targets that Pakistan presented at the 26th Conference of Parties (COP26), the country is going to reduce by 2030 its carbon emissions by 50 per cent.

Of the 50pc reduction target, a 15-percentage-point reduction is unconditional, meaning without the expectation of any foreign aid. The larger part consisting of the 35-percentage-point reduction in emissions is “subject to conditional support from bilateral and multilateral sources”.

Speaking on the occasion, OICCI President and Uni­lever CEO Amir Paracha said businesses should operate in a way that protects the environment because it’s a moral obligation as well as a “strategic imperative”.

“By integrating environmental considerations into our decision-making processes, we can protect our businesses from environmental risks and create long-term value for our stakeholders,” he said.

Referring to the World Bank Group’s Country Climate and Development Report, Mr Paracha said climate and weather-related disasters in Pakistan resulted in a total of $29.3bn of (inflation-adjusted) economic losses between 1992 and 2021.

“Whereas the 2022 floods alone resulted in an economic loss of nearly $30bn,” he said, adding that the country will continue to be vulnerable to extreme weather conditions in the near future and the trend will disrupt supply chains across the country.

He added that the combined risks of extreme climate-related events, environmental degradation and air pollution are projected to reduce Pakistan’s GDP by 18-20 per cent by 2050.

He welcomed the Securities and Exchange Com­mission of Pakistan along with the PSX and PICG for their “commendable work” on the regulation for environmental, social, and corporate (ESG) governance reporting.

“As we all gear up for the regulation, it is important to adopt ESG as a guiding principle rather than regulation,” he said.

Published in Dawn, June 7th, 2023