In the past few years, extreme weather conditions have become commonplace in Pakistan. Heat waves, droughts, and floods have become a yearly occurrence, affecting food and water security in Pakistan. The recent floods have destroyed wide areas of agricultural land resulting in approximately 80 per cent loss of rice, 88 per cent loss of sugarcane and 61 per cent loss of cotton production in the province of Sindh. The total adverse economic impact on agriculture is worth US$ 1.3 billion in Sindh alone. Reports state that approximately 15 per cent of Pakistan’s rice crop and 40 per cent of its cotton crop were lost due to these floods. According to experts, Pakistan could soon face food shortages if thousands of acres of cropland aren’t restored sustainably. Agriculture is both a cause and solution to environmental problems. Unfortunately, in Pakistan agriculture is linked to biodiversity loss and climate change. The impact of climate change on agricultural practices is creating serious challenges to the future food security of billions of people. According to UNESCAP, Pakistan could lose more than nine per cent of its annual GDP due to climate change. In the year 2021, Pakistan ranked 92nd out of 116 countries on the Global Hunger Index. In 2018, Pakistan introduced its first-ever National Food Security Policy, striving to increase food availability, accessibility, and sustainability by making the agriculture sector more productive, profitable, climate resilient, and competitive. The concept of food security has been defined by the United Nations as “all people, at all times, have physical, social, and economic access to sufficient, safe, and nutritious food that meets their food preferences and dietary needs for an active and healthy life”. The attainment of this ideology seems like a highly challenging task for Pakistan in the current times when the current agricultural practices are contributing approximately 21 per cent to the country’s soil pollution. Climate-smart agriculture techniques encourage the practices of sustainable agriculture; increasing adaptive capacity and resilience to climate change shocks at multiple levels. Sustainable Agriculture or Climate-Smart Agricultural practices are the elixirs that can help Pakistan to combat the threats of food shortages, food inflation and the lack of food security. Pakistan can invest in sustainable agriculture development practices and projects to adapt to the new realities of climate change. This could include moving towards climate-smart agricultural practices, such as switching to high-yielding crops, efficient water management, reducing water losses, and building small and medium size dams to tackle water shortages and boost agricultural output. Sustainable agriculture has the unique potential to mitigate climate change and strengthen resilience to the impacts of climate change. Climate-smart agriculture techniques encourage the practices of sustainable agriculture, increasing adaptive capacity and resilience to climate change shocks at multiple levels. The climate-smart agriculture approach enhances agricultural productivity to support an equitable increase in income, food security, and development; reduces Greenhouse Gas (GHG) emissions and increases carbon sequestration where possible. Through local climate resilience projects, Pakistan can restore the ecosystems, develop sustainable agriculture and plan how to adapt to the growing impacts of climate change. The State Bank of Pakistan (SBP) is playing an important role in this regard by issuing the ‘Guidelines for Efficient Agricultural Water Management Financing’, ‘Green Banking Guidelines’ and ‘Electronic Warehouse Receipt Financing’ to promote the adoption of climate-smart agricultural practices and products among agricultural borrowers. SBP is also encouraging financial institutions to take effective steps towards enhancing financing portfolios in rural areas. To foster the development of a sustainable agricultural economy in Pakistan and ensure food security within the whole society. Banks can reschedule the agriculture loans in the flood areas to help the farmers through these difficult times. Furthermore, banks can provide Climate Smart Agriculture Financing to promote the use of digital technologies, modern farming techniques, efficient farm mechanization and crop diversification. Climate Smart Agriculture Financing schemes under Green Banking may be launched for eco-friendly agricultural projects including green warehouses; sustainable agricultural supply chain networks; solar-powered tube wells/pumps and irrigation systems for minimizing electricity consumption; sustainable irrigation systems for the minimization of water wastage such as drip/trickle irrigation system, sprinkler irrigation system; agricultural waste management systems such as bio-plastic production; hydroponic technology; vertical/urban farming; rainwater harvesting equipment and digital agriculture projects such as drone technology in crop maintenance, data analytics, nanotechnology, artificial intelligence, etc. Climate-Smart agricultural financing will also positively influence the attainment of the United Nations – Sustainable Development Goals (UN-SDGs) 2030 No: 2 which is ‘”ending hunger, achieving food security, improving nutrition, and promoting sustainable agriculture.” The Government of Pakistan has already launched the “Kissan Card” to facilitate and support small farmers. The current Government is also planning to launch various incentives for farmers. In addition, the farmers should be trained in sustainable agricultural techniques and products and educated about various green financing options available to them. On July 15th, 2022, the World Bank approved US$ 200 million in financing to support Pakistan in transforming the agricultural sector by adopting climate-smart technologies to improve water-use efficiency, build resilience to extreme weather events and increase the incomes of small farmers. Sustainable and Climate-Smart Agriculture is the answer to Pakistan’s agricultural and resultantly economic woes. The financial institutions can lead Pakistan towards this path of economic recovery and resilience. Building a climate-resilient agricultural system is a complex undertaking that requires many different considerations among which financing is the most important. Agriculture is a front-line sector in terms of both its dependence and impacts on natural resources. Green and climate resilience financing by the banking sector can help develop response, recovery, and transformation capacity, against various climate change challenges, within Pakistan’s agricultural sector. Climate-resilient agriculture should be considered holistically as a management system with multiple stakeholders. Climate change is a worldwide problem often addressed at the national and international levels. The Climate Smart Agriculture Financing schemes under Green Banking also have a critical role to play in developing sustainable agriculture techniques in Pakistan. It is time we realize that agriculture is not a stand-alone economic sector but rather a pivotal cog in the country’s economic system without which we cannot envision a green, sustainable and resilient future for Pakistan. The Pakistani agricultural sector needs a drastic Climate Smart and sustainable transformation. The writer is working as a Chief Manager (Green Banking Office, Bank AL Habib Limited, Pakistan) and can be contacted at [email protected].