Page 21 - CMA Journal (May-June 2025)

Focus Section
Focus Section

ESG Compliance as the Missing Link in

Pakistan’s Export Growth Strategy

One of the modern approaches to become strategic leader investor interests,
in export is to implement growth-led strategy in Pakistan. export competitive-
Pakistan’s best growing exports industries are screened ness, and access to
under the lens of environmental, social and governance preferential trade
(ESG) aspect. This is basic reason why Pakistani exports are arrangements, rather
restrained to enter into developed markets. This than remaining a
phenomenon presents significant challenges to business voluntary corporate
sustainability in Pakistan. social responsibility
program (OECD, 2020).
Most of the south Asian countries like Bangladesh,
Vietnam and Türkiye have strong footing in implanting • Environmental
ESG framework in comparison with Pakistan in indicators focus
protecting and raising their exports marketplaces. Their on waste Imtiaz Bashir, FCMA
way of entering into developed markets only through management, Senior Instructor of Commerce
following the ESG standards like fulfilling the labor rights, emissions, and Government Graduate
environmental conservancy and corporate governance. resource College of Commerce, Multan
On the other hand, Pakistan is facing lack of ESG consumption.
awareness issues, any part of country implemented but
• Labor rights, workplace safety, and community
in fragments leads to careless reporting measures.
effects are examples of social elements.
Understanding ESG Global Standards • Governance includes openness, board
and Expectations accountability, and anti-corruption measures
(Kotsantonis & Serafeim, 2019).
This article examines how Pakistan's export
competitiveness is impacted by its substandard ESG Guidelines for ESG disclosures are provided globally by
performance. There is a need to position Pakistan's frameworks such as the SASB guidelines and the Global
exports within a global economy driven by sustainable Reporting Initiative (GRI). Pakistani exporters would be
development. To do so, it must critically evaluate existing impacted by stricter rules under the GSP+ program, such
ESG issues, global trends, and practical policy as the European Union's Corporate Sustainability
recommendations. Reporting Directive (CSRD), which mandates those
businesses exporting to Europe report on their ESG
Global trade now heavily considers environmental, social,
performance.
and governance (ESG) requirements. ESG compliance is
becoming a trade promotion tool that directly impacts

Table 1: Impact of implementation of ESG Standards and Export Performance (2023)
Country 1 ESG Compliance 2 Export Growth Export Sector GSP+ Sector access
Score Rate (%) Equivalent
Vietnam 65 10.4 Textile, Electronics Yes (EU-Vietnam FTA)
Bangladesh 62 8.6 Textile Yes (EU, EBA)
Turkey 70 7.1 Textiles, Machinery Yes (EU Custom Union)
Pakistan 45 3.5 Textiles, Farming Conditional (EU GSP+)

Sources: ¹Database related to ESG (World Bank), ²International Trade Centre, Statistic, 2023

ICMA’s Chartered Management Accountant, May-June 2025 19