SECP’s ESG Regulations in Pakistan: A New Era for Corporate Sustainability Reporting
Pakistan has taken a decisive step toward embedding sustainability into its corporate landscape through the Securities and Exchange Commission of Pakistan’s (SECP) phased introduction of mandatory ESG disclosures. These requirements, aligned with the International Sustainability Standards Board’s (ISSB) IFRS S1 and IFRS S2, will be gradually enforced across listed and public interest companies, creating a structured path for consistent, transparent, and decision useful reporting.
A Phase-Wise Roadmap
The SECP has designed a three phase rollout to allow companies time to adapt.
- Phase I (effective July 1, 2025): Targets PSX-listed companies that meet at least two criteria: annual turnover above Rs. 25 billion, more than 1,000 employees, or total assets exceeding Rs. 12.5 billion.
- Phase II (effective July 1, 2026): Expands the scope to companies meeting slightly lower thresholds: turnover over Rs. 12.5 billion, more than 500 employees, or assets exceeding Rs. 6.25 billion.
- Phase III (effective July 1, 2027): Applies to all other listed companies and public interest entities registered with SECP.
IFRS S1 and S2
The foundation of SECP’s requirements is based on the ISSB’s IFRS S1 and S2 standards. IFRS S1 establishes the overall framework for sustainability related financial disclosures, requiring companies to communicate how sustainability risks and opportunities could impact their financial performance in the short, medium, and long term. It emphasises governance, strategy, risk management, and performance metrics, while reinforcing the importance of materiality in disclosures.
IFRS S2 is specifically focused on climate-related disclosures. It mandates that companies assess and report physical risks such as extreme weather events, transition risks associated with regulatory or policy changes, and opportunities like improvements in energy efficiency. The standard also requires the reporting of greenhouse gas emissions across Scopes 1, 2, and 3, supported by scenario analyses to illustrate potential impacts under different climate futures. By adopting these two standards collectively, SECP aims to ensure that Pakistani companies go beyond superficial ESG narratives to provide comprehensive, comparable, and investor relevant information.
ESG Sustain: A Digital Disclosure Platform
To further support these regulations, SECP has launched ESG Sustain, an interactive online platform aimed at improving the availability and reporting of sustainability related disclosures. ESG Sustain functions as a knowledge hub, providing companies with capacity building resources, climate related data, and guidance on reporting frameworks. It also showcases success stories of regulated sectors, highlighting best practices and practical pathways for others to follow. The platform not only streamlines reporting but also promotes responsible business practices by encouraging environmental stewardship, social equity, and inclusive governance.
Metrics and Reporting Guidance
To aid implementation, SECP has also issued voluntary ESG disclosure guidelines with metrics. These cover environmental performance (including energy consumption, renewable share, emissions tracking, and water use), social indicators (workforce diversity, employee turnover, health and safety, training, and human rights practices), and governance structures (board oversight, anti-harassment policies, and sustainability committees). Over time, these guidelines will become the benchmarks for measuring progress, comparability, and accountability across industries.
The integration of IFRS S1 and S2 into SECP’s framework, coupled with the launch of ESG Sustain, means companies must now approach ESG not as a peripheral activity, but as a core component of strategy and long term resilience.