‘ISLAMABAD, Nov 1: The Chairman SECP, Akif Saeed said that the SECP has been actively striving to inculcate a regulatory environment that considers the environmental impact, encourages corporate social responsibilities and stimulates good governance practices.
The Chairman SECP was speaking at the 2nd Pakistan Climate Conference organized by the Overseas Investors Chamber of Commerce and Industry (OICCI). Akif talked about recent developments on ESG framework in Pakistan and SECP’s vision of its governance framework.
Akif pointed out that Pakistan is one of 10 most climate-vulnerable countries in the world and has experienced the most devastating impacts of climate change in the form of catastrophic floods last year that affected 33 million people with loss of approx. PKR 3.3 trillion.
Akif said that one of the main ingredients for achieving long-term value for stakeholders is inclusivity. To address this area, not only has the SECP mandated female representation on companies’ boards, we are also actively striving towards creating conducive work environments by encouraging companies to implement gender diversity policies. I am glad to note that major strides have been made, and currently more than 87% of listed companies have atleast one female director on board. Further, the corporate governance regime requires ownership of ESG policy at board level and disclosure of ESG based initiatives in their annual reports. Most recently, SECP has also issued guidelines (for the public sector and public listed companies) in order to facilitate formulation of Code of Conduct for directors, senior managers and other employees.
He said the SECP is keenly pursuing the ever-evolving ESG arena globally to ensure that consistent and comparable information about the sustainability risks and opportunities is available to investors for informed decision making. Keeping in view best practices as well as local consideration, SECP had issued an ESG position paper in 2022 to start the conversation around ESG based consideration.
Our advocacy sessions started in January 2023 in partnership with a multilateral and were positively received by all stakeholders of capital market. I am glad that OICCI and a lot of participants here were also part of our symposiums. Further, the recently issued the Sustainability Standard – 1 (S1) on general disclosure and Sustainability standards 2, (S2) on climate related disclosures is a major step towards consistent, comparable and reliable disclosures. It is now important for all the relevant stakeholders in Pakistan i.e. OICCI, regulators, PSX, PICG and companies focus on the mode and extent of adopting these sustainability reporting standards. We have already initiated capacity building efforts in partnership with ICAP with our first session in May for capital market participants as well as inhouse capacity development of regulators and capital market institutions. I would like to state here that it is remarkable that the synergy created, in a very short period of one year, through collaboration and active feedback from stakeholders, has resulted into a cohesive ESG action plan, being finalized with relevant stakeholders and we welcome suggestions and feedback of OICCI as well as all relevant stakeholders in order to finalize the action plan.
Akif said that SECP has entered into an arrangement with a multilateral for establishing an online dashboard called ‘ESG Sustain’ that will be the premier national level one stop repository for all sustainability related laws, regulations, capacity building, reports, and data covering all regulated sectors. Considering we lack a centralized platform for climate change related information and sustainability based products, this platform can be valuable for local as well as foreign investors.
He informed participants that the SECP has issued ESG guidelines for voluntary adoption by the listed companies on which public consultation is currently in process. Considering, our listed companies are relatively familiar with the Governance pillar of ESG, the said guidelines have been designed to unequivocally focus on the other two pillars of E and S reporting using relevant reporting metrics. In the Environmental arena, the companies will be able to report on their performance using the internationally recognized metrics such as Green House Gas emissions, energy and water usage, environmental operations etc. Further, the companies will be disclosing the level of their board and management’s involvement to oversee and manage climate related risks.
He said that through collaboration and consolidating our efforts we can foster an environment of accountability and enable stakeholders to make informed decisions, support sustainable initiatives actively and attract investments.