Page 28 - CMA Journal (Nov-Dec 2025)

Focus Section

2. What to include in ESG Report and engagement, human-rights practices, labor practices,
Disclosures? health & safety, environmental management, and
waste/energy/water management.
The internationally recognized sustainability reporting
standards particularly IFRS (IFRS S1 and S2) guide the  Assurance & Verification Statement: The SECP
companies to disclose on the following: requires assurance from the second year of
reporting; therefore, transpa-
a
n
Governance Strategy Risk Maanagement Metrics and Targets rency on assurance is
important. The ESG report
h
•Governance • Approach the en ty • Processees the en ty •En ty’s performance
processes, controls uses to manage uses to idden fy, in rela oon to should mention whether the
a
and proceddures the sustainability-related assess, prriori se and sustainability-related report has been externally
en ty uses to risks and monitor risks andd
monitor and manage opportunitties sustainabbility-related opportuni es assured, the scope and level
sustainabiliity-related risks and •Progresss towards any of assurance obtained
risks and opportunni es targets tthe en ty has
opportunities set or is required to (limited/ reasonable), the
meet name of the auditor and the
methodology used.
Furthermore, a high-quality ESG report typically includes  Appendices & Mapping Index: Cross-reference table
the following components: mapping report content to relevant frameworks (e.g.,
IFRS S1/S2, SECP guideline, local governance code),
 Governance / BOD Chairman Statement: It
definitions, assumptions, boundary definitions,
includes Board oversight on ESG, roles of the
methodology notes, limitation disclaimers, and
sustainability committee, policies, strategic context,
data-collection method descriptions.
tone- from-the-top and sustainability vision.
Adhering to this structure helps produce a report that is
 Reporting Boundary and Scope: It may include
comprehensive, credible, and aligned with both global
legal entities covered, time period, major
and local expectations.
inclusions/exclusions, and restatements, if any.
2.1. Materiality Analysis
 Strategy: How ESG factors affect the business
model, strategy and long-term planning. For Materiality in ESG reporting refers to the process of
climate-relevant risks, scenario analysis or identifying material topics in Environmental, Social and
climate-risk implications, if material (refer to 2.1 for Governance (ESG) issues that are most relevant and
selection of material topics and materiality analysis), significant to an organization and its stakeholders. Key
should be disclosed. steps in materiality analysis include:
 Performance & Narrative: The report should  Identifying Potential ESG Topics: The potential ESG
include a summary of performance over the topics may include environmental (climate,
reporting period, comparison with previous periods emissions, resource use), social (labor, health &
(if any), and commentary explaining results, safety, human rights, diversity), governance (board
challenges and achievements. structure, policies, ethics, compliance), supply chain
risk, stakeholder impact, etc. For identification of
 Management Approach: The report should mention
potential topics, companies may refer to
the policies, programs, and processes adopted for
sector-specific GRI Standards.
training, supplier due diligence, community
Poten al Topics Materiality Ra ng Topic is material
if assessed score
Financial Time Severity Likelihood Irreversibility Assessed exceeds 15
Impact Scale score
5 5 5 5 5 25
Employment 4 4 2 3 3 16 Material Topic
prac ces
Waste 5 5 3 2 2 17 Material Topic
Biodiversity 2 2 2 3 2 11 Not Material
Topic
Health and Safety 4 5 3 3 4 19 Material Topic
Data security & 5 5 3 2 4 19 Material Topic
Customer Privacy
DE&I 4 3 3 4 2 16 Material Topic
Table: Illustration of determining scoring and prioritizing material topic
26 ICMA’s Chartered Management Accountant, Nov-Dec 2025