Advancing ESG Integration in Stock Market: A Sectoral Study of Sustainability Reporting in Pakistan

Abbasi, Umar and Ali, Amjad and Audi, Marc (2025): Advancing ESG Integration in Stock Market: A Sectoral Study of Sustainability Reporting in Pakistan.

Abstract

This study examines sustainability reporting practices among firms listed on the Pakistan Stock Exchange, focusing on sectoral differences, reporting patterns, and the interconnection between economic, social, and environmental dimensions. The research analyzes standalone sustainability reports from sixty-two organizations across fifteen sectors between 2016 and 2020, using content analysis aligned with the global reporting initiative standards. The findings indicate that although sustainability reporting has increased in Pakistan, it remains uneven and largely motivated by compliance. Disclosures heavily emphasize economic indicators such as financial performance, with leading firms disclosing at a rate of 94.4 percent, while lagging firms report significantly less on environmental issues such as emissions and energy consumption, and social concerns including labor rights and child labor, ranging between eleven and twenty-three percent. Sectoral analysis reveals that banking, oil and gas, and cement sectors report more frequently, largely due to regulatory obligations and stakeholder scrutiny, while retail and engineering sectors lag behind. The presence of integrated reporting positively correlates with comprehensive performance across the three sustainability dimensions i.e., economic, environmental, and social, but remains limited due to the voluntary nature of frameworks, inadequate resources, and weak enforcement mechanisms. The study highlights the need for mandatory reporting, capacity development programs, and strategic alignment with global frameworks such as the global reporting initiative and the United Nations Sustainable Development Goals. Policy reforms, tailored sector-specific guidelines, and active stakeholder engagement are essential to bridge the divide between symbolic gestures and meaningful sustainability disclosures. This research contributes to the discourse on environmental, social, and governance reporting in emerging markets, offering insights for policymakers, corporate executives, and investors aiming to advance sustainable development in Pakistan.

• Item Type: MPRA Paper
• Language: English
• Keywords: Sustainability Reporting, GRI Standards, ESG Disclosures, Corporate Governance
• Subjects: M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M1 - Business Administration > M14 - Corporate Culture ; Diversity ; Social Responsibility

References

Ahmed, F. A. (2019). Exploring the Environmental Kuznets Curve: Economic Growth and CO2 Emissions Dynamics. Journal of Business and Economic Options, 2(1).

Ahmed, F. and Saeed, M. (2022). Sectoral Characteristics and Sustainability Reporting: An Investigation of Pakistani Firms. Journal of Business Sustainability, 10(2), 22–35.

Ahmed, F., Ismail, M., and Saeed, M. (2021). A Comparative Analysis of Environmental Sustainability Practices in Pakistan: Challenges and Opportunities. International Journal of Environmental Sustainability, 8(3), 43–58.

Ahmed, R., and Jamil, M. (2021). Adoption of Global Sustainability Reporting Frameworks in Pakistan. Journal of Business Ethics and Sustainability, 15(2), 45–67.

Ahmed, R., and Javed, T. (2021). Sustainability disclosure practices in Pakistan’s financial sector. Pakistan Journal of Corporate Governance, 10(1), 45–67.

Ahmed, Z., and Saeed, A. (2022). Sustainability Reporting and Financial Performance: Evidence from Pakistan. Asian Journal of Corporate Governance, 10(1), 89–104.

Alam, S., and Raza, M. (2018). Corporate Governance and Sustainability Disclosure: A Study of Pakistani Listed Firms. Pakistan Journal of Management Sciences, 9(3), 112–130.

Alam, S., and Usman, M. (2019). The role of corporate governance in sustainability reporting: Evidence from Pakistan. Journal of Business Ethics and Sustainability, 8(3), 112–130.

Ali, H., Khan, S., and Tariq, F. (2022). Institutional Influences on Sustainability Reporting in Pakistan. South Asian Journal of Business Research, 8(2), 57–74.

Ali, M. (2018). Inflation, Interest and Exchange Rate Effect of the Stock Market Prices. Journal of Business and Economic Options, 1(2), 38-43.

Anwar, M., and Khan, T. (2022). ESG Disclosures in the Pakistani Banking Sector. Journal of Financial and Sustainability Studies, 6(1), 33–49.

Ashraf, R., Qureshi, S. and Saeed, M. (2020). The Role of Green Banking Guidelines and ESG Framework in Enhancing Sustainability Reporting in Pakistan. Pakistan Journal of Banking and Finance, 12(1), 55–67.

Audi, M., Ahmad, K., Poulin, M., & Ali, A. (2025). Different Dimensions of Globalization and CO2 Emission Nexus: Application of Environmental Kuznets Curve for Worldwide Perspective. International Journal of Energy Economics and Policy, 15(3), 553-566.

Banyen, T. (2022). Behavioral drivers of stock market participation: Insights from Ghanaian investors. Journal of Business and Economic Options, 5(2), 1-13.

Durbin, E., & Filer, J. (2021). Evaluating the Impact of Public Awareness Campaigns on Sustainable Practices. Journal of Energy and Environmental Policy Options, 4(4), 32-37.

Global Reporting Initiative (GRI). (2016). GRI Standards.

Haque, F., and Ntim, C. G. (2020). The effects of corporate characteristics on sustainability disclosures. International Journal of Accounting and Business, 15(4), 310–329.

Hassan, R., and Farooq, N. (2019). Legitimacy Theory and Corporate Sustainability Reporting in Pakistan. International Journal of Business Ethics, 11(4), 120–135.

Hervieux, C., Lefebvre, M. and Gulati, R. (2017). Barriers to Sustainability Reporting in Developing Countries: Cultural, Regulatory, and Organisational Constraints. Journal of Sustainability Research, 13(2), 78–92.

Hsieh, H. F., and Shannon, S. E. (2005). Three approaches to qualitative content analysis. Qualitative Health Research, 15(9), 1277–1288.

Hussain, A., Shah, S. Z. A. and Khan, M. A. (2020). Sustainability reporting trends in emerging economies: A case of Pakistan. Journal of Business Ethics and Sustainability, 14(2), 88–104.

Iqbal, M., Hussain, A., and Raza, M. (2020). Determinants of sustainability reporting: Evidence from Pakistani firms. Asian Journal of Sustainability Studies, 7(2), 88–105.

Iqbal, Z., and Jamal, H. (2021). Family Ownership and Sustainability Reporting Practices in Pakistan. Journal of Corporate Responsibility, 7(3), 76–92.

Ismail, M., Ahmed, F. and Saeed, M. (2023). Systemic Interconnectedness and Sustainability Reporting: The Role of Organisational Integration. Journal of Corporate Sustainability, 9(1), 19–32.

Khan, A., Khan, A. and Rehman, S. (2019b). Sustainability Reporting in Pakistan: A Sectoral Analysis. Asian Journal of Business and Sustainability, 6(4), 44–60.

Khan, S., and Ahmed, R. (2017). Early adoption of sustainability reporting in Pakistan: Motivations and challenges. Journal of Sustainable Development, 10(4), 45–60.

Khan, S., Tariq, A., and Farooq, M. (2022). Sustainability reporting trends in Pakistan: An industry-level analysis. Sustainable Development and Corporate Responsibility, 12(1), 27–49.

Lin, C. (2021). The Role of Sustainable Building Materials in Advancing Ecological Construction. Journal of Energy and Environmental Policy Options, 4(1), 15-21.

Mahmood, M., Ali, F. and Raza, S. (2019). Symbolic Legitimacy and Sustainability Reporting in Emerging Economies. Journal of International Business and Sustainability, 7(2), 34–47.

Malik, A. and Nadeem, M. (2022). Stakeholder pressure and sustainability disclosures: Evidence from Pakistani firms. Journal of Business Ethics and Sustainability, 15(3), 112–130.

Munir, Q., Akram, B., & Abbas, S. A. (2024). Understanding Stock Price Dynamics with Dividend-Related Metrics and Financial Indicators in Pakistan's Non-Financial Sectors. Journal of Business and Economic Options, 7(1), 1-9.

Nasir, M. and Tariq, F. (2021). Stakeholder theory and corporate sustainability practices: A case of Pakistan. Asian Journal of Corporate Governance, 9(1), 34–50.

National Climate Change Policy. (2012). Government of Pakistan.

Olubiyi, E. A. (2023). Determinants of Dividend Policy in Nigerian Stock Exchange Companies. Journal of Business and Economic Options, 6(3), 1-8.

Pakistan Stock Exchange. (2023). About PSX.

Petrakis, M. (2021). Entrepreneurial Integration of Sustainable Development in Business Practices. Journal of Energy and Environmental Policy Options, 4(4), 1-7.

Porro, L., & Gia, N. (2021). Assessing Transport System Efficiency and Sustainable Development in Trade and Manufacturing Sector. Journal of Energy and Environmental Policy Options, 4(2), 9-16.

Rahman, A., Zahid, K., and Shaikh, N. (2021). The regulatory environment of sustainability reporting in Pakistan. Journal of Environmental Accounting, 6(3), 142–161.

Rehman, U., and Saeed, M. (2020). The Role of Stock Exchange Regulations in Promoting ESG Reporting in Pakistan. Pakistan Business Review, 22(1), 98–115.

Roussel, Y., & Audi, M. (2024). Exploring the Nexus of Economic Expansion, Tourist Inflows, and Environmental Sustainability in Europe. Journal of Energy and Environmental Policy Options, 7(1), 28-36.

Securities and Exchange Commission of Pakistan (SECP). (2017). Corporate Governance Code.

Shahabuddin, Q., & Ali, M. (2024). Investment decisions and satisfaction of individual investors at the Dhaka Stock Exchange: A behavioral perspective. Journal of Policy Options, 7(2), 43-54.

Situngkir, H. (2024). The Role of Corporate Social Responsibility in Enhancing Company Value: Evidence from Sustainable Companies. Journal of Energy and Environmental Policy Options, 7(2), 17-27.

Subhani, I., Iqbal, J., & Jamil, F. (2022). Relevance of Earnings Metrics: A Comparative Analysis of EPS and CFO on the Pakistan Stock Exchange. Journal of Business and Economic Options, 5(4), 16-25.

Suchman, M. (1995). Managing Legitimacy: Strategic and Institutional Approaches. Academy of Management Review, 20(3), 571–610.

Walsh, D. (2022). Exploring the Link Between Cultural Characteristics and Sustainable Development Success. Journal of Energy and Environmental Policy Options, 5(1), 1-6.

Wang, J., & Huang, M. (2024). Dynamics of South Asian Stock Exchanges and Their Global Interactions During and After the Financial Crisis. Journal of Policy Options, 7(3), 20-29.

Yousaf, B., and Raza, S. (2022). Regulatory Developments and Sustainability Reporting in Pakistan. Journal of Economic and Corporate Sustainability, 5(2), 67–85.

Zhang, Y. (2021). Measuring Progress Toward Sustainable Development Goals Through Legal Integration and Policy Guidance. Journal of Energy and Environmental Policy Options, 4(1), 1-8.