ISLAMABAD (Eshfak Mughal) :- The Securities and Exchange Commission of Pakistan (SECP) has proposed a sustainable Environmental, Social and Governance (ESG) roadmap to attract to the international investor for billions of dollar investment in the country’s capital markets within next two years.
The ESG is an approach of assessing companies on Environmental, Social and Governance performance factors. Environmental criteria addresses a company’s operations environmental impact and environmental stewardship, Social criteria refers to how a company manages relationships with and creates value for stakeholders and governance criteria refers to a company’s leadership and management philosophy, practices, policies, internal controls and shareholder rights.
According to the consultative position paper of the SECP, in order to capture the growing interest of institutional investors in ESG based investing, encourage ESG practices and ESG reporting in Pakistan, SECP has proposed a sustainable ESG roadmap for capital markets which comprises of extensive awareness and advocacy sessions to synergize with all relevant stakeholders. The SECP will increase advocacy awareness of ESG consideration in the country up to Sept 2022.
In June 2023, the Commission shall launch a dedicated ESG dashboard named ‘SECP Sustain to serve as a focused communication platform and capture the progress on adaption of ESG initiatives on real time basis.
According to the SECP, uo to Sept 2023 the Commission intends to undertake feasibility for introducing ESG guidelines aimed at harmonizing the disclosures related to ESG indicators and metrics. This shall pave way for launch of ESG based mutual funds & other financial products and ESG based Index at PSX up to June 2024.
In a bid to gauge progress of industry in ESG ecosystem, impact assessment of financial implication of ESG risks can be undertaken as a follow-up exercise up to Dec 2024.
Around $120 billion was directed towards sustainable investments in year 2021. In 2022, it is expected that ESG considerations shall continue to remain a priority in the corporate sphere.
Investor engagement, regulation, and societal expectations are driving focus on ESG matters. Different jurisdictions including USA, UK, EU, Japan, Thailand, South Korea are adopting different approaches to address ESG risks, opportunities and disclosures.
In order to collaborate further, SECP intends to hold consultative sessions with key stakeholders.