SECP urges listed firms to have ESG policy in place

ISLAMABAD: Recent floods across the country have enhanced need for identifying environmental social and governance (ESG) issues and risks, said the Securities and Exchange Commission of Pakistan (SECP) chairman Aamir Khan on Saturday, urging listed companies to have an ESG policy in place.

He was addressing the 20th anniversary celebration event of CFA Society Pakistan on a subject ‘Pakistan Capital Markets 2002-2042’. Former minister for Finance and Revenue Miftah Ismail, CFA Society president Abdul Rehman Warraich, advocacy chair of CFA Society Mohammad Shoaib, and Sima Kamil, deputy governor, SBP were also present.

“SECP considers sustainability as a priority in its regulatory agenda. Through consultation with all stakeholders, SECP has proposed an ESG regulatory roadmap with key milestones for capital markets,” Aamir khan said.

Through Listed Companies (Code of Corporate Governance) Regulations, 2019, based on comply or explain approach, board of directors were required to have an ESG policy in place and disclose implementation of ESG initiatives, khan explained.

The SECP has also unveiled guidelines for the corporate sector to raise funds from the capital market to finance or refinance projects that contribute positively to the environment. All issuers who are eligible to issue debt securities, including sukuk either by way of public offer or private placement are eligible to issue green bonds while ensuring compliance with applicable regulatory framework, according to the SECP chief.

Khan pointed out that environmental, social and governance factors were gaining traction in the capital market, as investors were increasingly incorporating sustainability factors into their investment decisions.

He hoped that the efforts would pave the way for promoting ESG based investing, enhancing ESG disclosures and launch of ESG-based financial products and ESG based Index at Pakistan Stock Exchange in due course.

SECP supported initiatives that foster competition and inculcate ethical decision making, both internally and in our regulated sectors, he said.

In the past three years, khan continued, the SECP had introduced various reforms in local markets for promoting transparency, ensuring consistent regulatory actions, and leveraging technology. “In achieving our goals, we are ensuring that our policies and decisions conform to values of objectivity, integrity and equitability.”

SECP chief applauded efforts of CFA Society Pakistan for playing an effective role in raising awareness, capacity building and research in issues related to corporate governance, sustainability and ESG based investing.