By combining innovative financial tools with inclusive, data-driven strategies, governments, and global partners can mitigate climate risks, support recovery, and foster resilience.

Coordinator to Pakistan’s Prime Minister on Climate Change, Romina Khurshid Alam said that the escalating adverse fallouts of climate change including extreme weather events, rising sea levels, and prolonged droughts have underlined the urgent need for climate-vulnerable developing countries to hammer out comprehensive strategies to address loss and damage in vulnerable communities.

However, integrating disaster risk financing into broader loss and damage efforts is a crucial step toward building resilience, ensuring timely response, and supporting long-term recovery, she emphasized while delivering a keynote address at an important event ‘Pakistan and the Global Shield’ held at the Pakistan Pavilion in Baku on the sidelines of COP29 global climate summit held on Wednesday.

“Integrating disaster risk financing into loss and damage efforts represents a proactive approach to managing the escalating costs of climate change. By combining innovative financial tools with inclusive, data-driven strategies, governments, and global partners can mitigate climate risks, support recovery, and foster resilience,” the PM’s climate aide Romina Khurshid Alam told the participants from various countries, UN agencies and nongovernmental organisations. “Collaborative action today will safeguard communities and ecosystems for a more secure and equitable future.”

She said further that Wednesday’s discussions with climate and disaster insurance experts and the climate change and environmental coordination ministry’s senior officials explored the pressing gaps in pre-arranged financial protection — particularly in public infrastructure, agricultural livelihoods, and small businesses — and how the Global Shield can bring unique value by aligning development efforts, fostering a country-led process, and leveraging pre-arranged financing instruments.

“Let me also highlight an important takeaway from today Pakistan’s approach serves as a model for integrating disaster risk financing into broader loss and damage efforts. This comprehensive, data-informed, and inclusive process sets an inspiring precedent for other climate-vulnerable nations,” The PM’s coordinator Romina Khurshid Alam remarked.

Mitigating Financial Losses

In her welcome remarks, Secretary Climate Change and Environmental Coordination Ministry, Aisha Humera Moriani said that over the years, need for viable financial protection for communities and their livelihoods has gained significant attention with the increasing recognition of climate change as a critical public policy issue. This has led to the development of more detailed policies and strategies to address its impacts.

She said further that in Pakistan, the costs of most large-scale natural disasters are retained in the government books, and only a few disasters risk insurance or non-insurance instruments are present. That calls for an urgency of closing the significant financing gaps that remain in Pakistan’s ability to respond to such disasters. Unfortunately, insurance penetration, which could be crucial in mitigating financial losses, remains limited, and is less than one per cent of the country’s GDP, she highlighted.

Highlighting climate change and environmental coordination ministry’s recent assessment work jointly carried out with Sustainable Development Policy Institute and UN Development Programme, the climate change ministry secretary informed the participants that Being a pathfinder country, an extensive in-country process was conducted over the past 3 months to take stock of climate, disaster risk finance and insurance initiatives and identify gaps in financial protection.

As a result, the climate change ministry has received several proposals from national and provincial government departments as well as the private sector to bridge this gap forming Pakistan’s formal Request for Support to the Global Shield which is being handed over today, she highlighted.

“We are fortunate to have such a broad and committed range of stakeholders with us today. The involvement of international development partners, civil society, and the private sector will be crucial in advancing our shared goals, the ministry secretary Aisha Humera Moriani said.

Shock-responsive Social Protection Systems

Hamza Haroon, Regional Director-South Asia from the Climate Vulnerable Forum Vulnerable 20 (CVF-V20), underscored the critical importance of addressing the needs of the most vulnerable communities through disaster insurance programmes in Pakistan.

“Introducing climate insurance products for disaster-vulnerable communities, their livelihoods and infrastructure is cornerstone of policy efforts and programmes being taken by the Pakistani government for building climate resilience,” he underlined and suggested, “Engaging with insurance companies to introduce different disaster insurance plans for vulnerable communities and sectors will be a crucial step by the different relevant government organisations including ministry of finance and climate change & environmental coordination ministry.”

Mr Joerg Linke, from GIZ Competence Center Climate, showcased the transformative potential of shock-responsive social protection systems that can be scaled up in Pakistan for climate-vulnerable communities.

He said that while the frequency and intensity of climate shocks such as natural disasters, economic crises and pandemics increase, the shock-responsive social protection systems (SRSPs) have emerged as a critical tool for safeguarding vulnerable populations.

“By integrating flexibility and responsiveness into traditional social protection mechanisms, SRSPs in Pakistan would not only provide urgent relief during crises/disaster times but also help foster long-term resilience and equity,” Joerg Linke told during his speech.