Climate-smart investment

The devastating urban floods that Pakistan has witnessed in recent years are no longer isolated events that can be dismissed as seasonal misfortune. They are symptoms of a deeper malaise in our planning, investment choices, and urban governance

Every monsoon, the same cycle repeats itself. The streets turn into rivers in Rawalpindi and Islamabad as the Lai nullah overflows. In Karachi, outdated drainage systems collapse under the weight of heavy downpours, leaving entire neighbourhoods submerged.

In Khyber Pakhtunkhwa and the Potohar plateau, flash floods cut through communities where encroachments have blocked the natural flow of rivers and streams. In Gilgit-Baltistan, hotels and restaurants have been built right along riverbanks, in some cases literally on top of them, making human settlements highly vulnerable to glacial melt and torrential rains.

These recurring patterns highlight not only the absence of resilience in our infrastructure but also a worrying trend in how investments continue to flow into projects that amplify risk rather than mitigate it.

Pakistan today stands at a crossroads where the conversation around investment cannot be detached from the realities of climate change. If we continue to build in floodplains, allow construction in ecologically fragile mountain regions, and expand housing societies without basic drainage plans, we will be compounding our vulnerabilities and inviting losses that far outweigh the profits.

Climate-smart investment is not simply a catchphrase. It is the need of the hour to safeguard communities, attract sustainable capital and ensure that the real estate and construction sectors are aligned with national climate action.

The role of the real estate and construction industry in this regard is critical. Real estate activities contribute between approximately 5.4 and 5.8% of GDP, while the construction sector adds roughly another 2.3 and 2.8%.

It is estimated that real estate alone accounts directly for nearly 2-3% of GDP, with the total broader sector including housing finance, cement and allied industries at around Rs2 trillion annually. This highlights the economic stakes: millions rely on these industries for livelihoods even as they drive urban expansion.

Yet economic opportunity and environmental vulnerability cannot coexist unchecked. The climate-induced disasters in Pakistan cost around 1-2% of GDP every year.

These sectors have traditionally operated in silos, treating environmental considerations as an afterthought. This must change. They need to be directly engaged in climate action planning so that developers and builders understand what kind of infrastructure can be classified as climate-resilient and where it should be located.

This means introducing zoning regulations that clearly demarcate no-build zones along riverbanks, nullahs, floodplains and other ecologically sensitive areas.

It also requires strict enforcement of building codes in the northern regions where deforestation to make way for real estate projects has destabilised slopes and increased the risk of landslides and debris flows. A climate-smart strategy must send an unambiguous signal that the days of unchecked construction in high-risk areas are over.

Housing societies are another area where reform is urgently needed. Too often, new societies are advertised as symbols of modern living without any consideration for how they will withstand climate impacts.

Drainage planning should be the first test of credibility for such projects. No Objection Certificates should not be issued until developers submit comprehensive drainage designs that have been vetted by qualified urban planners and engineers. This requirement must not end once construction begins.

Drainage management should be integrated into the long-term maintenance obligations of housing societies, with regular inspections to ensure systems are functional and upgraded as needed. These reports should be submitted not only to provincial authorities but also to relevant federal agencies, ensuring accountability is shared across all levels of government.

A crucial aspect of this debate is public awareness. Citizens often view investment in housing schemes or commercial projects in scenic river valleys or flat plains as desirable due to their location or price. What is less understood is that such investments carry significant hidden risks.

A home constructed in the middle of a stream may look idyllic until the first major flood wipes it away. A hotel built on a riverbank may generate profits during tourist season, but one heavy spell of rain can destroy the property and put lives at risk. Awareness campaigns must therefore highlight the dangers of building in hazard-prone areas.

Climate-smart investment is not only about infrastructure but also about reshaping mindsets so that communities and investors understand the actual costs of risky development.

This is where the public and private sectors must collaborate in a serious and structured manner. The private sector cannot remain on the sidelines of climate resilience.

Corporate Social Responsibility and Environmental, Social, and Governance frameworks already provide pathways for businesses to align their investments with sustainability goals. The real-estate sector, for instance, can channel CSR funding into pilot projects that showcase climate-smart housing designs, flood-resilient construction and renewable energy integration.

Construction firms can adopt ESG-linked standards that ensure their supply chains, materials, and practices minimise environmental harm while enhancing the resilience of final projects. Such efforts, when scaled, can change the market dynamics and shift consumer demand towards safer and more sustainable investment options.

At the same time, the government must create an enabling environment that attracts and directs private investment into climate-resilient infrastructure. The Pakistan Climate Change Fund, which needs to be established as directed under the Pakistan Climate Change Act 2017, can play a pivotal role in this regard.

Public-private partnerships can be mobilised to develop large-scale initiatives, such as climate-smart urban housing clusters, green drainage corridors and nature-based solutions like wetland restoration, to manage floodwaters. Investors will only participate if they see clear frameworks, transparent governance, and enforcement of rules. This requires political will and institutional coordination that have often been missing in the past.

There is also a pressing need to integrate climate considerations more rigorously into the Environmental Impact Assessment process. Too many projects secure clearance without any serious review of how they will cope with climate stresses over their lifespan.

Drainage plans, flood risk mapping, slope stability analysis and ecological impact studies should all be mandatory components of EIAs. Once submitted, these reports should not sit idle on shelves. They must inform the granting of licences and NOCs, and projects found lacking should be denied approval until compliance is demonstrated.

The broader picture is that climate-smart investment is not a niche activity for environmentalists. It is a national economic strategy. Pakistan is already one of the most climate-vulnerable countries in the world. International investors, multilateral institutions, and development partners are increasingly seeking resilience and sustainability before committing capital.

If our infrastructure continues to fail under extreme weather conditions, it will not only harm local communities but also deter foreign investment. Conversely, if Pakistan can demonstrate that it is steering its urban growth and construction sector toward resilience, it can unlock new flows of capital, insurance and technical expertise that are currently out of reach.

Investments in areas prone to disasters must be phased out. No-build zones along rivers and floodplains must be enforced. Housing societies must incorporate drainage as a central feature of their design and maintenance. The real estate and construction industries must be integrated into climate action planning.

Public-private collaboration must be scaled up. Financing mechanisms such as the Pakistan Climate Change Fund must be leveraged to attract and direct capital into projects that strengthen resilience. Above all, the mindset of investors, planners and citizens alike must shift from short-term profit to long-term survival.

Pakistan does not lack talent, ideas or ambition. What it has lacked is the discipline to align its investment decisions with the realities of climate change.

The floods, the encroachments that choke our waterways and the crumbling drainage systems in our cities should serve as a wake-up call. The costs of inaction are already visible. The dividends of action will come only when climate-smart investment becomes the foundation of our development agenda.

Disclaimer: The viewpoints expressed in this piece are the writer's own and don't necessarily reflect Geo.tv's editorial policy.

The writer is an environmental scientist and leads the programme on ecological sustainability and circular economy at SDPI. She tweets/posts @ZainabNaeem7

Originally published in The News