Page 52 - CMA Journal (Nov-Dec 2025)

Focus Section

ESG Reporting and Disclosure

Background of ESG data, financial results,
materiality assess-
Focus on Environmental, Social, and Governance (ESG)
ment, and other
Reporting emerged as a response to the rapid economic
company-specific
growth after 2000 driven by mass production. The large
areas. Compliance with
quantity of Greenhouse Gases (GHGs) emitted due to
disclosures required by
mass production has contributed to severe climate
IFRS S1 & IFRS S2,
change, which ultimately undermines economic growth.
issued by the Interna-
This was not a significant issue before the 1970s, when
tional Sustainability
industrialization and production were limited due to
Standards Board (ISSB),
lower demand for goods and services. Between the
is mandatory for all
1970s and 2000, industrialization expanded rapidly
organizations.
through industrial, export processing, and Special
Economic Zones, along with road network infrastructure 1) Sustainability
development. Such economic activities produce both Standard (IFRS S1) Mazhar Mahmood, FCMA
positive and negative externalities for surrounding areas Chief Executive Officer,
IFRS S1 deals with four
or regions. Most governments implemented Corporate Mazhar Mahmood & Company
general requirements
Social Responsibility (CSR) to mitigate negative
for the disclosure of
externalities and foster a positive relationship between
sustainability-related financial information, which
industrialists and suburban communities through
include Governance, Strategy, Risk management, and
philanthropic activities. After 2000, growing climate
Metrics & targets.
challenges led to CSR being replaced by the ESG
framework, shifting its focus from regional to global and a) Governance: A company has to show that
expanding its scope from philanthropy to ESG sustainability is embedded in its planning and
performance (including governance performance in operational activities. Its approach to sustainability is
protecting stakeholders’ rights, seizing emerging reflected in how capital is raised, internal operations
opportunities, and managing environmental risks). are managed, financial products are deployed, and
how the company engages with the economies and
The main objective of ESG reporting is to strengthen
societies in which it operates.
stakeholders’ and investors’ confidence in an
organization’s strategy to address Environmental, Social,
and Governance impacts and ensure
Major Governance Disclosures
long-term sustainability. Disclosures explain
and support specific information in reports  Governance Structure: Structure of Board of Governors (BoG), Board of Directors (BoD),

through comparative data presented in d their roles in informing

metrics, tables, KPIs, and notes.

 Business: Processes, controls, and procedures to enable stakeholders to make prudent
Sustainability Reporting investment decisions.

 Policies, Rules & Procedures
Sustainability reports include a combination rights, due care of all stakeholders (employees, investors, suppliers, and customers), and
of general and specific/mandatory informa-
tion intended for stakeholders, particularly  : Commitment to global frameworks like GRI, ISSB,
SASB, SDGs, and TCFD, with third-party assurance of ESG data to enhance credibility, and
investors, to guide their investment
ESG KPIs, including the percentage of independent directors.
decisions. General information covers an

 Stakeholder Engagement:
overview of the company, similar to a according to Mendelow’s Matrix (Power & Interest).
traditional financial report, commitment to
 Metrics & Targets of Governance: Metrics for targets and progress. For example, a target
sustainability reporting and ongoing for board independence may be 70%, but the actual achievement is 65%. Similarly, for
improvements, business model, connection t 11 were actually
held, achieving 110% of the target.
with financial reporting and comparative
50 ICMA’s Chartered Management Accountant, Nov-Dec 2025