Green Finance, Climate Risk, and Sustainable Development Goals: Evidence from Pakistan

Abstract

Climate change and environmental degradation have created significant challenges for sustainable development, particularly in developing economies such as Pakistan. This study examined the relationship between green finance and Sustainable Development Goals (SDGs) by investigating the mediating role of climate risk mitigation. A quantitative cross-sectional research design was adopted, and primary data were collected from 350 respondents including employees of commercial banks, Islamic banks, development finance institutions, and government organizations. Data were analysed using SPSS 29 and SmartPLS 4 through reliability analysis, validity assessment, Partial Least Squares Structural Equation Modelling (PLS-SEM), and mediation analysis. The findings revealed that green finance significantly influenced SDGs achievement (β = 0.452, p < .001) and positively affected climate risk mitigation (β = 0.614, p < .001). Furthermore, climate risk mitigation significantly contributed to SDGs (β = 0.371, p < .001). Mediation analysis confirmed that climate risk mitigation partially mediated the relationship between green finance and SDGs (β = 0.228, t = 6.483, p < .001). The study highlights the importance of strengthening green financial policies, climate-resilient investments, and sustainable finance mechanisms to accelerate SDG achievement in Pakistan.

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