Pakistan Exporters Need Shared Support to Meet Global Green Trade Rules
FAISALABAD, PAKISTAN — WEB DESK: Pakistan’s major export industries face mounting pressure to invest in cleaner production as environmental performance increasingly becomes a condition for access to major international markets, raising questions over how the cost of the green transition should be divided between manufacturers, global brands, financiers and the government.
The challenge is particularly significant for Pakistan’s textile and apparel sector, which remains central to the country’s export economy.
Textile and apparel exports reached approximately $17.93 billion in FY2025-26, although annual growth was only 0.26%, according to Pakistan Bureau of Statistics figures cited in the analysis. During July-March FY2025-26, the sector represented 59.7% of Pakistan’s total exports.
The European Union is particularly important to Pakistan’s exporters. Textiles and clothing account for roughly 70% to 76% of Pakistan’s exports to the EU, while Pakistan remains the largest beneficiary of the bloc’s GSP+ preferential trade programme. The country received about €732 million in tariff exemptions in 2024 under the scheme, according to the report.
These commercial links mean tighter environmental and supply-chain requirements in major overseas markets can have direct consequences for Pakistani manufacturers.
Sustainability Becomes a Market-Access Issue
International buyers increasingly expect suppliers to provide information not only about price and product quality but also about carbon emissions, energy sources, water consumption, waste management, labour conditions, traceability and responsible sourcing.
Meeting those requirements can require significant investment.
Factories may need to install renewable-energy systems, upgrade inefficient machinery and boilers, improve wastewater treatment, develop carbon-accounting capabilities, introduce digital traceability and employ specialised sustainability personnel.
For large exporters, these investments can represent a substantial financial commitment. For small and medium-sized manufacturers, limited access to affordable financing can make the transition even more difficult.
The issue is therefore not whether Pakistan’s exporters need to become more sustainable, but how the cost of doing so can be managed without undermining their international competitiveness.
Shared Transition Responsibility
One proposed approach is the principle of Shared Transition Responsibility, which seeks to distribute the financial and operational burden of industrial decarbonisation among manufacturers, international brands and financiers rather than leaving suppliers to fund the transition alone.
The argument is that international brands also benefit when their suppliers reduce emissions. Cleaner factories can help multinational companies reduce reported supply-chain emissions, fulfil climate commitments and comply with increasingly stringent environmental requirements.
A shared model could include co-investment, longer-term purchasing commitments, technical assistance, preferential sourcing arrangements and access to concessional green financing.
Long-term commitments are particularly important because exporters may be reluctant to make expensive investments in clean technology if they cannot be confident that international buyers will continue placing orders with them.
Government Also Has a Role
Responsibility would not rest exclusively with foreign buyers.
Pakistan’s government would need to provide a stable policy environment, competitive energy costs, reliable infrastructure, environmental regulation, green-finance mechanisms and incentives for companies investing in cleaner technology.
This makes export competitiveness increasingly interconnected with Pakistan’s energy, climate, industrial and financial policies.
Exporters themselves would also need to integrate sustainability into broader corporate strategy rather than treating environmental compliance as an isolated administrative function.
Production, procurement, financing, energy management and investment decisions could all increasingly be influenced by environmental standards.
Digital tools such as Digital Product Passports could also become important as global buyers seek greater transparency about materials, manufacturing processes and supply chains.
For Pakistan, the transition presents both risk and opportunity.
Failure to meet evolving environmental requirements could weaken exporters’ access to valuable international markets. Successfully modernising factories, improving resource efficiency and securing green financing, however, could strengthen Pakistan’s position in global supply chains.
The central challenge is ensuring that Pakistani manufacturers are not required to absorb the entire financial cost of standards from which brands, consumers and importing markets also benefit.
A sustainable transition will therefore require coordinated action from exporters, international buyers, financial institutions and policymakers if Pakistan is to protect both its export competitiveness and its position in an increasingly low-carbon global trading system
