Page 29 - CMA Journal (Nov-Dec 2025)

Focus Section

 Stakeholder Engagement: It includes engaging Companies must adopt a phased approach. This
investors, employees, suppliers, community should start with limited scope (material topics),
representatives, regulators, civil society, customers, simple disclosures, build baseline data and then
etc. to understand what issues are material from grow it over time.
their perspectives.
 Risk of “Greenwashing” or Superficial Disclo-
 Prioritization and Scoring: The rating of material sures: The ESG report may not be credible if
ESG topics is based on potential financial impact (on companies disclose only positive ESG aspects while
investors, stakeholders and the environment), time leaving out risks and challenges that have negative
horizon (short/medium/long term), severity, likeli- impacts. Hence, disclosures without robust data or
hood, and irreversibility of that event/topic. assurance may raise concerns. Therefore, to mitigate
this challenge, companies should adopt
 Validation from Board and Sustainability
transparency in the methodology, avoid selective
Committee of BOD: A formal approval of materiality
disclosure, focus on material topics and integrate
assessment and selected ESG topics for disclosures is
ESG into governance and risk management.
required to be obtained from the Board or
sustainability committee of BOD for validation and  Regulatory Uncertainty and Evolving Standards:
approval. Global ESG standards and local regulatory regimes
are still evolving. ESG reporting and disclosure
 Disclosure of Materiality process: The ESG report
requirements may expand over time (e.g., more
of companies should describe their materiality
metrics, deeper assurance, digital tagging).
assessment methodology, stakeholder engagement
Therefore, ESG reporting processes and data systems
process, assumptions made, limitations and how the
ought to be flexible, keep up with regulatory
topics were selected and prioritized.
changes (e.g., from SECP, global standard-setters)
3. Common Challenges & Mitigations and plan for periodic review and updates.
It can be difficult to make the switch thorough ESG Conclusion
reporting, especially in order to satisfy local and
With the twin forces of global investor demand and
international standards. Some common challenges and
evolving regulations, companies can no longer treat ESG
suggested mitigations include:
reporting and sustainability disclosure as peripheral or
 Lack of Data & Measurement Systems: It is philanthropic. The way forward for high-quality ESG
possible that many Pakistani businesses lack reliable reporting is clear: board commitment, rigorous
systems for gathering data on energy use, emissions, materiality assessment, robust data systems, transparent
waste, water, labor metrics, supply-chain data, disclosures and assurance guided by harmonized global
diversity data, etc. Therefore, they should start with standards and local regulatory requirements.
the important, high-priority metrics (such as energy
The path to ESG reporting may be challenging for the
use, emissions, and workplace safety) and
time being, but the stakes in terms of investor
progressively expand data collection to lessen this
confidence, regulatory compliance, social license and
difficulty. To implement internal data-collection
long-term sustainability are too high to ignore.
controls, use the operational and financial systems
that are already in place, designate data owners, and References:
record methodology and assumptions.
• SECP ESG Disclosure Guidelines (2023) and amendments
 Gaps in Institutional Expertise and Capacity:
• Listed Companies (Code of Corporate Governance) Regulations,
Interdisciplinary skills in supply chain management, 2019 (10A Regulations)
risk management, human resources, finance,
• International Financial Reporting Standards (IFRS S1 and S2)
environment/climate science, and stakeholder
engagement are all necessary for sustainability • GRI Universal Standards, 2021
reporting. However, many businesses lack internal About the Author: The writer is an Associate Member of ICMA
expertise. Consequently, businesses need to invest Pakistan, a Certified Business Accountant (ICAP), Certified Internal
in training, consider external consultants or Control Auditor (IIC–USA), ISO-31000 Certified Risk Manager
(PECB–Canada) and an M. Com Gold Medalist. With over 12 years of
ESG-advisory firms, and collaborate with industry
experience, he has expertise in Enterprise Risk Management (ERM),
associations or regulators for capacity building.
sustainability reporting, business planning, internal audit and
 Resource Constraints Including Time, Staff, Cost: regulatory compliance. He is currently serving as Senior Officer
(Strategy & Risk Management) at SNGPL and also works as a lead
Producing a robust ESG report (with assurance)
trainer on the Risk Management Framework at Sui Northern Gas
entails cost and management bandwidth, which Training Institute (SNGTI).
may be burdensome for mid-size or smaller firms.
ICMA’s Chartered Management Accountant, Nov-Dec 2025 27