Shozab Majeed | Executive Director, Global Peace Summit
The world is currently experiencing a subtle sense of urgency, referred to as ESG, which stands for Environmental, Social and Governance.
ESG is more than a mere buzzword for Pakistan, a nation that is precariously balanced between industrial ambition and climate vulnerability. It is the compass that is urgently required to guide us towards a sustainable and competitive future. Nevertheless, it remains a topic that is rarely discussed, often confined to donor reports and boardrooms. This must be altered.
Pakistan has a compelling argument for elevating ESG to the forefront of national discourse. This is not a matter of fulfilling checklists or accommodating foreign interests. The goal is to establish credibility in our industries, resilience in our systems and dignity in our development model. Pakistan’s susceptibility to climate change is widely acknowledged. Recurrent floods, severe droughts, melting glaciers and a level of air pollution that routinely engulfs its cities are all challenges that the nation encounters. In this context, ESG provides a practical approach to not only mitigate environmental risks but also enhance governance, guarantee labour safety and attract essential capital.
One of the more promising narratives which is emerging in this field is from the Ministry of Energy (Power Division). The Ministry has demonstrated a commitment and a willingness to take the initiative to align the power sector with ESG principles. ESG-linked disclosures is an important area to be incorporated into the framework of the National Electric Power Regulatory Authority (NEPRA). Power companies are to be encouraged to showcase environmental and social compliance data for public understanding. This adheres to a paradigm widely regarded as the gold standard for climate risk transparency, inspired by the global Task Force on Climate-related Financial Disclosures (TCFD).
The Ministry has also supported the expansion of renewable energy sources in the national energy balance which is another positive development. The updated Indicative Generation Capacity Expansion Plan (IGCEP) also has concrete steps in the right direction. The Ministry is also focusing on developing better governance models and increasing transparency. Although it is not revolutionary, it represents a significant departure from existing policies. These measures are essential for reducing the sector’s carbon intensity, which remains among the highest in the region.
In addition, the Ministry has supported digitalization reforms in DISCOs, which, when implemented effectively, will enhance transparency and governance, two fundamental components of ESG. The Ministry has initiated programs that are implementing consumer grievance redressal mechanisms, public consultations on tariffs and gender mainstreaming in the energy sector. Although these modifications may seem inconsequential, they are structural and have greater impact. They establish a foundation for more severe reform and more credible ESG compliance.
Although there are indications of progress, Pakistan still lacks a unified ESG compliance framework. There has to be a unified approach by the ministries, which have to be integrated into a standardized set of rules which are industry-focused. SECP has issued ESG reporting guidelines for listed companies and the State Bank of Pakistan has implemented green banking principles. However, there is no centralized body or law that unites these endeavours. For example, the Ministry of Climate Change has played a crucial role in implementing the Paris Agreement and the Global Methane Pledge. However, it lacks the institutional authority to enforce ESG metrics across other ministries.
International models provide valuable guidance. Chile, for instance, aligned its renewable energy tenders with ESG scores. India’s Ministry of Power mandated ESG disclosures for state-owned utilities and green bond frameworks were established to finance the country’s sustainable transition. The Financial Conduct Authority and the United Kingdom’s Net Zero Strategy have transformed ESG into a legally enforceable baseline for all industries, leading to substantial reductions in emissions. In contrast, Pakistan’s advancements are fragmented and primarily voluntary. In the electricity sector, however, the groundwork has been established. The subsequent events will determine whether ESG becomes a fundamental component of national policy or remains a donor-driven checkbox exercise.
Additionally, this has a geopolitical component. As the EU commences the implementation of carbon border adjustment mechanisms, countries that neglect to disclose and reduce emissions may see their exports taxed or blocked. This poses an existential threat to Pakistan’s textile and manufacturing sectors. ESG compliance is not merely a matter of image; it is a necessity for survival in a rapidly evolving global economy. To make progress, we must address three critical areas. First, the Prime Minister’s Office should establish a National ESG Authority or Council to ensure cross-sectoral compliance. Secondly, ensure that the government sets a positive example by incorporating ESG criteria into all public procurement and infrastructure initiatives. Third, organize an annual Pakistan ESG Summit that invites global observers, investors and ESG monitors to report on the country’s progress and commit to the next steps in complete transparency. An initiative in this regard has been taken by the Global Peace Summit (GPS) to provide a platform for showcasing industry-specific achievements in this important field by holding the ESG Summit 2025, scheduled to begin on October 25.
Numerous obstacles await. The current juncture, however, presents a unique convergence of global urgency, institutional awakening and political will. The Ministry of Power has exemplified the potential of targeted leadership. The private sector must now take the lead and other ministries must follow suit. ESG is no longer a matter of mere appearance; it is a matter of safeguarding Pakistan’s future in a rapidly evolving world.
— The writer is a International Law expert with a rich experience in negotiation, mediation and Alternate Dispute Resolution.
