Call for strict compliance of environmental laws

Islamabad : Environmental social governance is a major concern as financial stability of the financial sector is paramount since banks use public funds to conduct lending operations, Sima Kamil, deputy governor, State Bank of Pakistan.

Ms Kamal was speaking at a seminar on ‘Environmental, social and governance (ESG) practices in Pakistan: progress, challenges, and way forward,’ organised here by Sustainable Development Policy Institute. Faheem Sardar, Senior Economic Advisor, National Security Division, moderated the event.

Ms Kamal said it is crucial for banks to be able to measure and mitigate environmental risks. She observed that along with financial stability, financial inclusion is a crucial concern for SBP for sustainability.

She said that the SBP issued Green Financing Guidelines in 2017 for banks as a footprint of their potential role for green business facilitation and impact reduction. However, these guidelines are still far for being followed in letter and spirit. She said that there is an increased realisation in Pakistan’s financial sector that meeting the ESG standards are pertinent to attract large foreign investors. She emphasised developing green taxonomy to prevent green washing by corporate sector and ensure practice in letter and spirit.

In his welcome remarks Dr Abid Qaiyum Suleri, Executive Director, SDPI, said that there is a need for strict compliance on environmental laws and ESG practices for reaching a win-win solution by involving the private sector and multi-national corporations as part of the solution rather than blaming them entirely as the root cause of the environmental degradation. He said that Pakistan needs a customised version of indexing and marking to facilitate and mainstream ESG initiatives in the country.

Sadia Khan, Commissioner, Securities and Exchange Commission of Pakistan, said that the ESG initiatives are gaining greater significance worldwide and the SECP has been at the forefront in addressing these sustainability issues for the corporate sector in Pakistan. As the pace and impact of societal and environmental disruption intensifies, a robust ESG strategy will be critical for businesses to drive reliable performance and resilience. She urged the need for sensitising the corporate sector on the significance of ESG, developing guidelines and regulations to create ownership to instill ESG principles in practice.

Zeeshan Suhail, public affairs manager, Nestlé Pakistan, said that economic pressures have made it a challenge for local organisations to integrate ESG principles into their businesses. He remarked that business benefit and positive societal impact must be mutually reinforcing.

Rafay Alam, environmental lawyer, said that the world is going through extreme climate events and according to UN there is enough carbon in the atmosphere to cause 1.5 degree C increase in temperature compared to pre-industrial levels. He stressed the need for unprecedented changes in economic and social behaviour and strict implementation of environmental laws to reduce the impact of human activities on the environment.