Pakistan’s Habib Bank Limited (HBL) is set to issue the country’s first green bond by a commercial bank, with the International Finance Corporation (IFC) proposing an investment of up to $100 million to support climate-related lending in the South Asian nation.
The proposed investment, structured as a private placement with a tenor of up to five years, is expected to support HBL’s inaugural green bond issuance and expand financing for eligible green and climate projects in Pakistan, according to an IFC project disclosure seen by DevFiNews.
The transaction highlights growing efforts by development finance institutions to deepen sustainable finance markets in emerging economies through local financial institutions and capital markets.
HBL, Pakistan’s largest bank by branch network, operates more than 1,700 branches across the country.
Its main shareholder is the Aga Khan Fund for Economic Development, which holds a 56.6% stake, while British International Investment, the UK government’s development finance institution, owns nearly 5%.
IFC said the proposed investment would help deepen Pakistan’s still-limited green bond market and support the adoption of international standards for climate-focused financing.
If completed, the issuance would mark the first green bond by a commercial bank in Pakistan, creating a potential benchmark for other lenders seeking access to long-term climate finance funding.
IFC said the project could also encourage broader adoption of international green finance practices through demonstration and replication effects.
The proceeds of the bond are expected to finance green, blue, and climate-related projects, primarily in the energy and water sectors, while potentially supporting electric vehicle adoption initiatives.
The investment also includes a blended finance component. IFC plans to mobilise up to $50 million from international private credit insurers under its Managed Co-Lending Portfolio Program (MCPP FIG III), helping HBL diversify its long-term funding sources and scale its climate finance activities.
Alongside the financing, IFC said it would support HBL in aligning the issuance with the International Capital Market Association’s Green Bond Principles and local regulatory requirements.
The institution also plans to provide technical support to strengthen the bank’s green bond framework, climate project assessment capabilities, and sustainability reporting processes.
The project has been categorised as FI-1 under IFC’s Environmental and Social Sustainability Policy due to potential risks associated with underlying climate-related sub-projects.
IFC said HBL already has an established environmental and social management system integrated into its credit approval processes, though further enhancements are planned, including due diligence frameworks for solar supply chains and improvements to grievance mechanisms.
The proposed investment remains subject to IFC approval.