Page 22 - CMA Journal (May-June 2025)

Focus Section

Table 2: Key ESG Frameworks and their Relevance to Export Markets
ESG Standards Research Trade Relevance
Sources/Authors

OECD Guidance for Multinational OECD (2020) Sets out responsible business conduct in
Enterprises cross-border trade
Global Reporting Initiative GRI (2023) Widely used for voluntary ESG (GRI)
Disclosure
SASB Standards IFRS Foundation Industry-specific ESG indicators for
(2022) Investors

EU CSRD European Under GSP+, companies exporting to the
Commission (2023) EU market must comply

ESG and export Competitiveness; Qureshi et al. (2023) Industry JSFI Empirical link between ESG
Textile weaknesses and export losses

ESG and company valuation Kotsantonis & ESG impacts investment and Trade
Serafeim (2019) Positioning
Source: Compiled by Author based on published studies and institutional guidelines

Pakistan's potential for export growth is constrained by South Korean Ministry of Trade, Industry, and Energy.
its inability to meet these shifting demands, particularly 1.3. Vietnam - Vietnam is committed to adopting ESG
in the textile, leather, and agricultural industries (Qureshi standards as part of its development strategy under
et al., 2023).
the EU-Vietnam Free Trade Agreement (EVFTA).
1) ESG patterns in the main exporting nations Following the enactment of this agreement,
Vietnamese textile exporters recorded a 12%
Most exporters are gradually implementing ESG increase in foreign orders from the EU within a year,
standards into their corporate practices and business according to a study conducted by the World Bank.
ethics. In order to gain access to developing markets and
expand brand goodwill, there is a dire need to implement These examples demonstrate that ESG compliance is a
the highest standards of corporate governance, as milestone for enhancing corporate attractiveness,
demonstrated by nations like Vietnam, Germany, and attracting new investment, and managing
South Korea. risk—objectives that cannot be achieved through
traditional business practices alone. These global trends
1.1. Contribution of the European Union and provide a roadmap for Pakistan to align its export
Germany - The United Kingdom promulgated a law, strategy advantageously.
the Supply Chain Due Diligence Act (2023), which
requires traders to screen ESG risks in their global 2) Implementation of ESG in Pakistan’s Export Sector
supply chains (BMAS, 2023). As a result, exporters
As far as Pakistan is concerned, ESG practices in the
must incorporate labor, environmental, and
country lag significantly behind those of other South
governance laws into their business practices, which
Asian nations, despite Pakistan being a major exporter in
in turn become part of their reporting requirements.
the leather, textile, and agriculture sectors. Based on the
By consistently fulfilling ESG requirements, German
above studies and findings, it is evident that Pakistan is
exporters have gained exceptional market access in
missing out on attractive export opportunities due to a
developed nations, particularly in the automobile
lack of ESG supply chain appeal, contemporary
and equipment industries (PwC, 2023).
implementation, and a proper reporting framework
1.2. Korea - According to a KPMG study on the impact of (Qureshi et al., 2023; IFC, 2022).
ESG standards implementation, South Korean
According to one study, most ESG initiatives in Pakistan
exporters have experienced a 76% increase in supply
are implemented either under the sponsorship of
chain involvement and customer loyalty. This
external business projects or due to pressure from large
improvement is attributed to the enactment of the
international buyers such as H&M and IKEA.
New South Korean Agreement, promoted by the
20 ICMA’s Chartered Management Accountant, May-June 2025