Fostering Green Finance for Sustainable Development: A Focus on Textile and Leather Small Medium Enterprises in Pakistan

Abstract

The green financing landscape in Pakistan is evolving, which signifies the need for a comprehensive gap analysis that examines the present status and constraints in supporting green finance in the country. Textile and leather industries are key sectors in Pakistan’s economy and rely heavily on small and medium enterprises (SMEs). Excessive resource use and inadequate environmental management methods pose a significant danger to the sectors’ long-term viability and account for an extreme relevance to the embracement of the circular economy paradigm. Green finance aims to ensure that economic process, safeguarding the environment, and maintaining environmental integrity all grow together. This research used a literature review and interview-based methodology (in which we interviewed more than 20 people representing SME operators, government officials, and banking staff) to examine SME finance, green banking, and demand and supply side constraints to cleaner/sustainable manufacturing in Pakistan’s leather and textile sectors. The research findings show that policy uncertainty and financial short-termism are economic impediments and obstacles that constitute a path-dependent, lock-in, non-linear mechanism. This study found a lack of tailored business advisory and financing for SMEs to learn about and invest in sustainable consumption and production (SCP). Furthermore, many banks in Pakistan also show a strong commitment to the expansion of the State Bank of Pakistan’s Green Banking Guidelines (GBGs). The results also highlight the high value of government assistance for businesses participating in green initiatives and incentives for banking institutions and private limited companies to support and invest in green practices.

Opportunities and constraints for cleaner production policy in the developing world: a case study of Sindh Region, Pakistan

“…Green financing, where private banking supports the advancement of conservation measures such as CP through aspects such as low-interest loans, has been successful in other locations outside of Sindh. Financial support from other nations such as Sweden and the Netherlands, as well as the United Nations, has helped to expand CP in Pakistan to date; similar partnerships could help to expand CP in Sindh (Kumar et al, 2022 ). Unfortunately, not all businesses are as open to technology progress as they could be.…”

“…The focus group discussions often allow for both qualitative, quantitative, and observational information. The data from the focus group discussion were interpreted using qualitative analytic approaches such as grounded data investigation (Kumar et al, 2022 ; O.Nyumba et al, 2018 ; Braam et al . , 2020 ), and conversation analyses (Leech & Onwuegbuzie, 2007 , 2008 ).…”

Influence of financial resources on sustainability performance of SMEs in emerging economy: The role of managerial and firm level attributes

“…Hence, sufficient finances are necessary for environmentally friendly practices, whereas ventures with limited finances fail to comply with sustainable activities (Sadiq et al, 2022). Moreover, such enterprises use marginal analysis while indulging in sustainable activities (Kumar et al, 2022), while Scarpellini et al (2018) claim that, due to FR constraints, firms cannot actively participate in and implement eco-innovative activities.…”

The dynamic impact of green finance and renewable energy on sustainable development in China

“…In recent years, many studies have shown that the green financial market with strong development momentum is crucial to the implementation of renewable energy plans (Soundarrajan et al, 2016;Huang et al, 2021;Zheng et al, 2022). A large number of scholars have concluded that the development of green finance contributes to the achievement of sustainable development goals Kumar et al, 2022;Ibrahim et al, 2022), and generally there is a positive relationship between renewable energy and sustainable development (Lund and Henrik, 2007;Schwerhoff et al, 2017;Solangi et al, 2021). Energy transformation and upgrading help to achieve the sustainable development goals, while sustainable economic development promotes increased investment in renewable energy projects, thus promoting the transformation of energy structure.…”