Apex Court suggests Islamic Financing for Environmental Projects

Islamabad:

The top court has provided guidelines for the Punjab government to create a wastewater treatment system (WWTP) to treat the contaminated water flowing into the river Ravi.

While it is well established that decision -making falls within the domain of the exercise, the court has the right.

Therefore, without interfering with the political political power of the executive, the court finds it appropriate to propose certain possibilities that the executive authorities can consider while formulating their reaction to the challenge that is at hand, that is, the delay of Three decades by creating WWTP, seven pages written judgment author of justice Syed Mansoor Ali Shah.

The bench clarified that these recommendations, even if they are not binding, are intended to help the executive perform its obligations to environmental protection and sustainable development.

The order says the country that measures 6,937 channels was acquired by Water and Sanitation Authority (WASA), an agency for Lahore Development Authority (LDA), in three places in Tehsil and District Lahore – Babu Sabu, Jhuggian Nagra and Niaz Beg -I 1991-1992 through two awards dated 24.12.1991 and 23.02.1992.

The country was acquired with the public purpose of creating a waste treatment plant (WWTP) to treat the contaminated wastewater flowing into the river Ravi.

The order also said that WWTP should originally be funded by the World Bank, but the negotiations were not realized and almost three decades have passed without any progress on earth. WASA MD and Housing and Urban Development Punjab Secretary submit that fresh loan negotiations are now being pursued with the French Development Agency (AfD). In this regard, it is claimed that form PC -11 is subjected to approval before the Provincial Development Working Party (PDWP), Central Development Working Party (CDWP) and Executive Committee of National Economic Council (“ECNEC”) – Key organs responsible for financial Planning, infrastructure development and investment in the public sector.

“It is also claimed that the ECNEC approval is expected at the end of August 2025, and if it is awarded, says loan negotiations with the Department of February 2026,” says Ordren.

Justice Shah, while proposing suggestions, noted that access to climate financing is important to ensure climate adaptation and resilience, especially in vulnerable regions such as Pakistan, where environmental degradation directly affects fundamental rights such as life, health and dignity. In this context, climate financing emerges as a viable, self -supporting alternative that is not only in accordance with environmental responsibility and financial sustainability, but also maintains fundamental rights under the Constitution.

Islamic funding principles, especially those who emphasize risk sharing and ethical investments, offer a non-debt-based approach to financing critical infrastructure. WASA may consider utilizing WAQF (gifts), sukuk (Islamic bonds) and public-private partnerships rooted in Islamic Finance. For example, a green Sukuk-ET Shariah-compatible financial instrument-be can be issued to raise funds specifically for the water purification system that attracts investors seeking both financial return and environmental impact.

Islamic funding has been a gaming elaborator in climate measures that offers ethical and sustainable economic solutions to the global South. Indonesia successfully launched a green sukuk in 2018, whereby $ 1.25 billion raised to finance renewable energy and climate resilient projects, demonstrating that Islamic financial instruments can effectively mobilize resources for environmental sustainability.

Malaysia’s Sustainable and Responsible Investment (SRI) Sukuk has funded water protection, waste management and solar energy initiatives. By integrating Islamic funding into climate strategies, especially within Muslim majority and climate-universal countries such as Pakistan, there is a significant potential to mobilize resources and improve the impact of global climate initiatives.

The order also said that WASA can investigate a number of WWTP technologies, including cost-effective and homework technological solutions to urgent to provide sustainable water management to the population of Pakistan.

“In addition, the restriction of the use of 6,937 channels of acquired land exclusively for WWTP can also be reconsidered. Given that the project’s footprint does not require Acres soil, WASA may be able to reuse the remaining country for other climate adaptation initiatives, such as affordation, renewable energy projects (solar or wind farms) or sustainable agriculture to combat soil degradation and improvement of food security.

Plan (2023-2030), which prioritizes adaptation efforts and identifies several key sectors such as water safety, agriculture and food safety, disaster icing, health, urban planning and infrastructure, ecosystems and biodiversity and energy.

“Our institutions must promote national adaptation strategies through original financial tools and home -waxed solutions that are in line with sustainability, community well -being and long -term economic stability,” the order said.

“Given the importance of WWTP and its importance to people’s fundamental rights, WASA may want to consider its financial and technological opportunities while pursuing its negotiations with the Department.”

“Let PDWP through his chairman, chairmanship and development Punjab, Civil Secretariat Lahore, CDWP through its chairman, deputy Prescribing Commission, Pakistan Secretariat, Constitution Avenue Islamabad and ECNEC, Cabinet Block, Cabinet Secretariat, Red Zone Islamabad Conclusion Conclusion August 2025. ECNEC is instructed to submit its final report to the court before the next consultation date.

The court resumes the hearing last week in September 2025 to assess whether the relevant authorities have successfully completed the case after investigating all sorts of economic and technological alternatives.

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