Within the next two years, the Securities and Exchange Commission of Pakistan (SECP) has recommended a sustainable Environmental, Social, and Governance (ESG) plan to attract international investors to Pakistan’s capital markets.
ESG is a method of evaluating a company’s environmental, social, and governance performance. Environmental criteria deal with a company’s environmental impact and environmental stewardship, while social criteria deal with how a company manages relationships with stakeholders and creates value for them, and governance criteria deal with a company’s leadership and management philosophy, practices, policies, internal controls, and shareholder rights.
According to the SECP’s consultative position paper, in order to capture institutional investors’ growing interest in ESG-based investing and encourage ESG practices and reporting in Pakistan, the SECP has proposed a long-term ESG roadmap for capital markets, which includes extensive awareness and advocacy sessions with all relevant stakeholders. Up to September 2022, the SECP will raise awareness of ESG consideration throughout the country.
The Commission will develop a dedicated ESG dashboard in June 2023 to serve as a focused communication platform and track the success of ESG initiative adaptation in real-time.
According to the SECP, the Commission plans to investigate the viability of establishing ESG rules aimed at unifying disclosures relating to ESG indicators and metrics up until September 2023. Up until June 2024, this will prepare the ground for the launch of ESG-based mutual funds and other financial products, as well as an ESG-based index at PSX.
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