ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has notified a sustainable Environmental, Social and Governance (ESG) roadmap for capital markets which comprises of extensive awareness and advocacy sessions to synergize with all relevant stakeholders.

The SECP officials informed media on Thursday that the understanding and practices around concepts of philanthropy, corporate social responsibility, sustainability and ESG practices are evolving and generally intertwined. The need for ESG centric advocacy, reporting and regulatory framework has been under consideration at different forums. It is imperative that integrated and phased approach is adopted for embracing ESG best practices drawing synergy from all relevant stakeholders.

They informed that around $ 120 billion was directed towards sustainable investments in 2021. The ESG considerations shall continue to remain a priority in the corporate sphere. In order to capture the growing interest of institutional investors in ESG based investing, encourage ESG practices and ESG reporting in Pakistan, the SECP has proposed a sustainable ESG roadmap for capital markets which comprises of extensive awareness and advocacy sessions to synergize with all relevant stakeholders.

Further, the Commission shall launch a dedicated ESG dashboard named “SECP Sustain” to serve as a focused communication platform and capture the progress on adaption of ESG initiatives on real time basis. Moving forward, the Commission intends to undertake feasibility for introducing ESG guidelines aimed at harmonizing the disclosures related to ESG indicators and metrics. This shall pave way for launch of ESG based mutual funds & other financial products and ESG based Index at PSX.

In a bid to gauge progress of industry in ESG ecosystem, impact assessment of financial implication of ESG risks can be undertaken as a follow-up exercise.

The guidelines have been prepared to encourage listed companies to enhance their ESG disclosures in a fair and transparent manner on voluntary basis. Since the guidelines are non-mandatory in nature, non-listed companies may also seek guidance from the draft guidelines for embarking on their journey towards adoption of ESG standards.

The SECP is committed to promoting sustainable and responsible business practices in Pakistan and issuance of the draft ESG guidelines is a significant step forward in this direction. By improving ESG disclosures, the SECP aims to improve transparency in company’s operations, promote sustainable business practices to reduce impact on environment and help investors make more informed investment decisions, the SECP officials added.

Copyright Business Recorder, 2024