History of ESG in Pakistan & implementation status

Pakistan is undergoing a structural shift in its corporate reporting landscape, moving from voluntary Corporate Social Responsibility (CSR) activities toward formal Environmental, Social, and Governance (ESG) risk integration. Driven by foreign investment mandates, climate vulnerability, and international trade requirements (such as the EU’s GSP+ status and CSRD regulations), domestic regulatory bodies are rapidly embedding ESG into mainstream financial governance.

1. Historical Evolution of ESG in Pakistan

• 2009–2013 (CSR Mandates): The Securities and Exchange Commission of Pakistan (SECP) introduced the Corporate Social Responsibility Voluntary Guidelines (2009), followed by mandatory CSR disclosure rules for public companies in 2013.
• 2017 (Corporate Governance Code): The revised Listed Companies (Code of Corporate Governance) Regulations 2017 introduced explicit board responsibilities regarding environmental protection, workplace safety, and ethical governance.
• 2019 (Green Banking Guidelines): The State Bank of Pakistan (SBP) issued Green Banking Guidelines (GBG), requiring financial institutions to manage environmental and climate risk in their loan portfolios and establish dedicated Green Banking Units (GBUs).
• 2024–2026 (ESG Reporting Frameworks): SECP, alongside the Pakistan Stock Exchange (PSX), launched formal ESG disclosure guidelines aligned with global baselines (GRI and ISSB IFRS S1/S2) for listed entities.

2. Institutional Framework & Regulatory Pillars

[SECP (Regulatory Policy & Corporate Rules)]
        │
        ├──> [PSX (Market Infrastructure & Listing ESG Guidelines)]
        │
        └──> [ICAP & ICMAP (Assurance, Accounting & Capacity Building)]

• Securities and Exchange Commission of Pakistan (SECP): Serves as the primary regulator drafting national ESG policies, mandatory disclosure roadmaps, and corporate governance directives.
• Pakistan Stock Exchange (PSX): Operates as the market facilitator. PSX established an ESG Task Force, released the ESG Reporting Primer, and introduced voluntary/phased mandatory reporting metrics for listed firms.
• Institute of Chartered Accountants of Pakistan (ICAP): Leads the technical standardization, capacity building, and assurance frameworks for sustainability reporting, aligning local practices with ISSB standards.

3. Current Implementation Status & Challenges

4. Key Priority Areas for Pakistani Industries

1. Supply Chain Climate Resilience: Pakistan’s major export sectors (Textiles, Apparel, Leather, and Agriculture) face tightening international buyer mandates regarding water stewardship, chemical safety, and carbon accounting.
2. Access to Sustainable Finance: Local enterprises must establish credible ESG frameworks to tap into global green bond markets, sustainability-linked loans, and multilateral climate funds.
3. Data Infrastructure & Standardized Reporting: Building internal data collection systems to transition from qualitative narrative reporting to audit-ready, quantitative metrics.

20-Part ESG Fundamentals Series Roadmap

• Part 1: Introduction to ESG: Foundations & Value Creation
• Part 2: History & Evolution of ESG: Global Overview
• Part 2B: ESG in Pakistan: History & Implementation Status (Current)
• Part 3: ESG Terminology Every Professional Should Know (Next Up)
• Part 4–20: Deep Dives into E, S, G Frameworks, ISSB Integration, and Implementation Blueprints

source:

https://www.linkedin.com/posts/engrmuhammadadnan11_secp-psx-icap-activity-7490663149759668224-4a_1