Page 57 - CMA Journal (Nov-Dec 2025)

Focus Section
The Realities of ESG Reporting and Disclosure

Challenges in Pakistan's Economy

Recently, Environmental, Social, and Governance (ESG) • Governance:
reporting has progressed from a niche corporate Governance issues
responsibility practice to a keystone of global investment include informa-
decisions and sustainability commitments of tion asymmetry,
organizations worldwide. There is increasing emphasis on bribery in govern-
ESG compliance and disclosures with every passing day. mental depart-
ments, price-fixing
ESG is a term widely used in today’s ever-changing
among competi-
world to describe the numerous non-financial aspects
tors, and restric-
that have the power to influence the performance of an
tions on citizens’
organization in the long term. In a way, ESG is a set of
voting rights. Such
standards or measures used to assess the impact of a
issues are espe-
business or an organization on society and the
cially significant in
environment, and also indicates the intensity of that
industries manag-
impact, that is, how transparent and accountable the Shakil Khawaja, ACMA
ing hazardous
impact is. Deputy Chief Manager Finance,
waste or sensitive
Sui Southern Gas
ESG factors referred as Environmental, Social and environmental Company Ltd. (SSGCL)
Governance, also affect the sustainability of the societies concerns.
in which we live and our planet Earth over a long-term
ESG is increasingly seen as an extension of CSR, and in
horizon. Environmental issues like noise pollution,
some sectors, even more important. ESG disclosures
extreme climate changes, wildlife preservation, and air
provide stakeholders, including shareholders, investors,
pollution are often included in ESG discussions, along
civil society, regulators, customers, and lenders, with
with social considerations such as high unemployment
information on how organizations manage environmen-
rates and wage inequality within the same class of labour,
tal impacts, social responsibilities, and governance risks.
whether skilled, semi-skilled, or unskilled. Governmental
authorities play an important role in ESG by regulating Implementing ESG reporting in Pakistan’s unique
policies related to labour and the environment within a economic and institutional environment presents
given society. challenges. These challenges will be explored through
real-life scenarios, national economic data, and practical
Key Elements of ESG examples, demonstrating why ESG reporting remains
• Environment: Environmental issues include both essential and complex in the local context.
extreme weather events such as heat waves, Why ESG Matters in Pakistan
drought, and flooding caused by natural disasters
like cyclones, twisters, and storms; changes in Before discussing the challenges, it is important to
biodiversity, including fungi, plants, and understand the context of Pakistan’s economy as of 2025:
microorganisms, due to deforestation and illegal • Nominal GDP of Pakistan is approximately USD 410.5
hunting of endangered wildlife; and loss of wildlife billion, with a real growth rate of around 2.7%
and human life. Events damaging the atmosphere, (Source: Reuters Economic Survey), reflecting a
particularly the ozone layer, are also key modest but fragile recovery from economic
environmental concerns.
turbulence in recent years. In FY2024, the rate of
• Social: Social issues include underprivileged unemployment was around 8% (Source: IMF Country
conditions for labour, child and bonded labour, Indicators) across all types of labour, while inflation
unsafe or harmful working environments, low or (CPI- Consumer Price Index) average was nearly
non-existent compensation, and human rights 4.5%, indicating a controlled level of household
violations against peaceful protestors. These issues purchasing power.
are particularly observed in chemical and other
high-risk industries.

ICMA’s Chartered Management Accountant, Nov-Dec 2025 55