The Securities and Exchange Commission of Pakistan (SECP) has issued voluntary Environmental, Social, and Governance (ESG) Disclosure Guidelines for listed companies. These guidelines promote responsible business practices and transparency amongst listed companies, specifically in light of freshly launched International Financial Reporting Standards (IFRS) S1 and S2 Standards issued by the International Accounting Standards Board (IASB).
The objective of the SECP ESG Disclosure Guidelines is to encourage companies to report on environmental impact, social responsibility, and governance structures. Companies can integrate ESG information into their Annual Reports or publish it separately. The SECP also amended corporate governance regulations to require anti-harassment policies and the formation of sustainability committees to align with these guidelines. The latter is pivotal, following an amendment in the Listed Companies (Code of Corporate Governance) Regulations, 2019 (Corporate Governance Regulations), made to strengthen oversight responsibilities of the Board of Directors regarding sustainability priorities.
The SECP's ESG Disclosure Guidelines for listed companies in Pakistan aim to enhance transparency, improve corporate governance, and promote sustainable business practices. By requiring companies to report on their environmental, social, and governance impacts, the guidelines can potentially help attract foreign investment and foster ethical business conduct. Additionally, the focus on social responsibility can affect the company’s reputation and stakeholder relationships, specifically very relevant and valid for export-based manufacturing companies, ultimately leading to a more responsible and transparent corporate sector in Pakistan.
