Page 35 - CMA Journal (Nov-Dec 2025)

)RFXV 6HFWLRQ

Macroeconomic Burdens and
Financial Pressures
Pakistan’s economy is afflicted with
unintended burdens like scarce
finances, inflation, and the persistent
issue of timely retirement of debt. For
many organizations, sustainability
becomes irrelevant in the face of their
existential threats. Transitioning to
renewable energy, reducing carbon
footprints, and improving labor
conditions is very costly and demands
substantial financial investments that
most companies are unable to afford or
meet to fulfill ESG requirements.
Pakistan is largely faced with missed opportunities for in society, which include the informality of labour
green financing and loans to pursue models for markets, hazardous working conditions, and absence of
sustainability. It is conveniently taken as a superfluity worker representation.
instead of an obligation.
The social element of ESG is very critical. Pakistan
Governance and Institutional Challenges struggles with systemic social challenges that make
compliance difficult. Informal labour markets, unsafe
Governance is a pivotal element of ESG, like a pillar, but a
working conditions, and lack of worker representation
weak governance system does not allow ESG to be
persist in various organizations. Exploitation of female
practiced in letter and spirit. Corruption, lack of
labour is pervasive. The female participation rate as part
transparency, and weak enforcement of regulations
of the labour force is pathetically low (25%) as compared
reduce investor trust in ESG claims. There are certain
to the contribution of females in the global workforce on
regulatory gaps that render compliance with ESG very
average. The quality of training and education is again
frail, leaving businesses with fragmented standards.
shamefully low, which is a major constraint in inculcating
Political instability is another factor that creates an
the importance of ESG among the workforce.
inconsistent policy environment. ESG needs a robust
governance system to instill authenticity in its framework Conclusion
and to be solidly accepted by industries.
Adoption of ESG is not just a byword of the corporate
Environmental Challenges Specific to Pakistan world but an inevitable requirement. The adverse impacts
of climate change, social unpreparedness, and economic
Pakistan is considered one of the most climate vulnerable and social disparities have left no room for Pakistan to
countries in the world, but environmental governance continue as a complacent nation. The advantages of
remains neglected. Disastrous climatic impacts that serious and early adoption of ESG principles in our systems
result in frequent floods, droughts, and heatwaves will help develop resilience against the devastating
highlight the urgency of ESG adoption, yet adaptation impacts of climate vagaries. Inclusive development could
measures are slow. Water scarcity, mismanagement of be ensured through ESG-oriented social policies and
water resources, and lack of conservation policies worsen would fortify the ability to compete in the global
Pakistan’s water crisis. Pollution and deforestation result economic arena. Sustainability leads to long-run
in one of the worst air quality environments globally, and prosperity. In Pakistan, while formal ESG reporting is an
deforestation continues at alarming rates. These emerging practice, several major organizations and
environmental realities demand immediate ESG companies exhibit strong commitments through their
integration, but weak infrastructure and inadequate sustainability and corporate social responsibility (CSR)
investments hinder progress.
initiatives that align with ESG principles.
ESG in Pakistan Encounters Social Impediments
About the Author: Prof. Dr. Samina Khalil is the former Director of
The key and indispensable component of ESG is social. the Applied Economics Research Center (AERC), University of
When a country is faced with innumerable challenges to Karachi. She earned her PhD in Environmental Economics and
address, it turns the tide against compliance. It is Management from the University of York, UK, and an M.Phil in
Economics of Developing Countries from the University of
directly connected to gross negligence of human rights
Cambridge, UK.

ICMA’s Chartered Management Accountant, Nov-Dec 2025