IN today’s world, businesses are expected to do much more than generate revenue for the shareholders. Businesses play a crucial role in contributing to societal betterment by promoting social development, conserving the environment and operating fairly, in alignment with international legal obligations. Corporate Social Responsibility (CSR) used to be something people did out of goodwill. Still, it is now a legal and moral duty supported by legislation in every country and around the world. It means that a corporation must operate its business in a manner that benefits all stakeholders, not just shareholders. This includes employees, communities and the environment.
The idea of CSR emerged prominently in the mid-20th century, but its modern form is grounded in a range of international conventions. The United Nations Global Compact (2000) established ten universally accepted principles related to human rights, labour, the environment and anti-corruption. Similarly, the OECD Guidelines for Multinational Enterprises compel businesses to adopt responsible behaviour across jurisdictions. The International Labour Organization (ILO) Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy further requires corporations to respect labour standards and community interests. These instruments collectively shape CSR as an international obligation rather than a philanthropic option.
Under national frameworks, CSR disclosure is not merely encouraged but required for public companies in Pakistan. The Securities and Exchange Commission of Pakistan (SECP) issued its Companies (Corporate Social Responsibility) General Order, 2009 (and voluntary CSR guidelines 2013), mandating public companies to report their CSR activities in the directors’ report alongside annual accounts. The Listed Companies (Code of Corporate Governance) Regulations, 2019, issued under the powers of the Companies Act, 2017, require listed companies to operate under a “comply or explain” regime, disclosing sustainability-related and CSR information. Most importantly, on 13 June 2024, the SECP introduced its ESG Disclosure Guidelines for listed companies, providing a structured baseline for Environmental, Social and Governance (ESG) disclosures. The guidelines also amended the Code of Corporate Governance to require boards to oversee ESG risks, form sustainability committees and ensure that policies such as anti-harassment policies are in place. These steps align Pakistan with global commitments under SDG 12 “Responsible Consumption and Production“ and SDG 13 “Climate Action“ while making ESG and CSR disclosures increasingly standardized and decision-useful for both domestic and international audiences.
Today, CSR is the international standard and cannot be divorced from the larger ESG (Environmental, Social and Governance) Framework, it defines how businesses should act responsibly. CSR focuses on investing in the community and improving lives by contributing to various projects that benefit society or the community. ESG adds a measurable and reportable aspect by making corporations measure and report on their environmental footprints, social impact and governance structures. International investors increasingly demand ESG disclosures as a precondition for capital inflow. The International Sustainability Standards Board (ISSB) standards (IFRS S1 and IFRS S2) set the tone for global mandatory sustainability reporting and Pakistan is moving through a phased adoption pathway. theaccountant-online.com In Pakistan’s case, the SECP’s ESG Disclosure Guidelines (June 2024) provide a voluntary baseline while signalling future mandatory compliance for listed companies. KPMG Assets+1.
For developing economies like Pakistan, embracing both CSR and ESG is not only a matter of compliance but also of business opportunity and national image. By adopting CSR and ESG rules and frameworks, Pakistan is likely to attract more international business and enhance its image as a responsible country. International institutions and investors, such as the World Bank Group and the Asian Development Bank, now evaluate projects through the lens of ESG. In case of non-compliance, there can be penalties on the company for abusing labour laws or regulations; it can face a fine, lose its funding or ultimately be cut off from the global supply chain. For example, the EU Green Taxonomy Regulation (2020) specifies that businesses can’t trade if they don’t meet environmental and governance standards.
International environmental and human rights legislation sets the rules that make both CSR and ESG legal. The Paris Agreement (2015) and the Rio Declaration on Environment and Development (1992) stipulate that everyone, including businesses, should contribute to sustainable development and reduce carbon emissions. The UN Guiding Principles on Business and Human Rights (2011) state that corporations must respect human rights, avoid causing harm and rectify any harm they cause. These ideas are being incorporated into the legal systems of countries worldwide. The Supply Chain Due Diligence Act (2021) in Germany and the Corporate Duty of Vigilance Law (2017) in France both require businesses in Europe to ensure that their global operations, including subsidiaries and contractors, comply with social and environmental regulations.
So, the government needs to be both a facilitator and a regulator. Pakistan, through the SECP, should ensure that there is mandatory disclosure of ESG and CSR by 2029, as per its vision. It should also be mandatory for the listed companies to publish their reports and showcase their CSR and ESG initiatives, which a third party should verify. More public-private collaborations in long-term projects, such as renewable energy, waste management and vocational training, would link economic growth with social advancement. The government, businesses and civil society may collaborate to establish an ESG Council of Pakistan, ensuring that all stakeholders adhere to the rules and that standards align with the UN Global Compact and the OECD Due Diligence Guidelines. As the world moves toward climate-conscious economies and responsible capitalism, Pakistan’s path forward lies in embracing these global norms with conviction. CSR and ESG are not external pressures, but rather internal necessities, tools through which business, law and morality converge. Together, they define the future of sustainable growth, where profitability and responsibility walk hand in hand and where a nation’s reputation is measured not merely by its GDP but by the integrity of its institutions and industries.
—The writer is a International Law expert with a rich experience in negotiation, mediation and Alternate Dispute Resolution.
