Beyond the Listing Threshold: Can Pakistan's ESG Framework Reach the Enterprises It Cannot Measure?
Who Cares Wins
For most of its history, the question of whether a company was doing good in the world was considered entirely separate from whether it was doing well financially. Profit was profit. Environmental damage, labour conditions, and boardroom accountability were, at best, someone else's department. That separation has been eroding for decades, but the pace of change accelerated sharply in the early 2000s when a coalition of financial institutions, convened by the United Nations, published a report called "Who Cares Wins." The report made a then-controversial argument: that environmental, social, and governance factors, now widely known by the shorthand ESG, were not peripheral concerns but material ones. Companies that managed climate risk poorly, treated their workers badly, or had opaque governance structures were companies with real financial exposure. Ignoring those factors was not prudent investing. It was incomplete analysis.The idea took hold. In 2006, the UN launched the Principles for Responsible Investment, or PRI, a framework through which institutional investors commit to incorporating ESG considerations into their investment decisions. What began as a niche initiative now has more than 5,000 signatories representing over USD 128 trillion in assets under management (UN PRI, 2024). That figure, roughly equal to the combined GDP of the world's two largest economies, gives a sense of how thoroughly ESG thinking has moved from the margins of finance into its mainstream. Governments followed. As of January 2026, twenty-one jurisdictions had adopted the sustainability disclosure standards developed by the International Sustainability Standards Board, or ISSB, on a voluntary or mandatory basis, with a further sixteen in the process of doing so (S&P Global, 2026). These standards, known as IFRS S1 and S2, require companies to report on sustainability-related financial risks and climate-related risks in a way that investors can compare and act on.On December 31, 2024, Pakistan joined that group. The Securities and Exchange Commission of Pakistan formally mandated the phased adoption of IFRS S1 and S2, with the first phase coming into effect for the largest listed and public interest companies from July 1, 2025. Subsequent phases extend the requirement to large companies from July 2026, and to remaining listed entities and unlisted public interest companies from July 2027. The commentary that followed was largely, and reasonably, focused on large listed companies. The SECP has introduced ESG disclosure guidelines, launched the ESG Sustain platform to centralise relevant resources and corporate disclosures, and initiated stakeholder engagement including industry surveys and capacity-building outreach around the new standards. These are the right first moves for a new regulatory regime. But they leave a critical question almost entirely unasked: what does any of this mean for the enterprises that exist below the listing threshold, and well outside the frame of Pakistan's formal capital markets, but that development finance organisations, impact investors, and international donors are actively trying to bring into the economic mainstream?
A Mandate Designed for One Economy, Deployed in Another
The architecture of IFRS S1 and S2 was built with large, publicly accountable entities in mind. Preparing these disclosures requires cross-functional expertise at the intersection of finance, climate science, and ESG risk management, as well as considerable investment in IT systems, data analytics platforms, external assurance services, and third-party consultancy support (ISSB, 2023). For large conglomerates and multinationals operating in Pakistan, this is a challenge that capacity building, phased timelines, and external advisory can address.For the enterprises at the other end of the spectrum, the challenge is different in kind, not just in scale.Pakistan's social and growth enterprise ecosystem, the small and growing businesses commonly referred to as SGBs, the women-led ventures, green economy startups, and community enterprises that incubators, accelerators, and patient capital providers work with every day, operates in a fundamentally different financial reality. These enterprises are often described as having social impact, a term that refers to the measurable effect a business or investment has on the wellbeing of communities and the environment, beyond what it returns to shareholders. Social impact can mean a women-led enterprise providing livelihoods in a rural district, a green energy startup reducing household fuel costs, or a community health venture reaching populations that formal services do not. The argument at the heart of ESG, and of impact investing more broadly, is that this kind of value creation is not separate from financial performance. Enterprises that generate genuine social and environmental value tend, over time, to be more resilient, more trusted, and more attractive to the growing class of investors who are required, or who choose, to account for it.The problem is that Pakistani SGBs typically carry no formal sustainability reporting infrastructure at all. Many do not have audited financial statements. Their impact is real, often visible and measurable in the communities they serve, but it is rarely reported in any standardised way that an institutional investor or development finance organisation can act on.This is not simply a capacity problem. In Pakistan, the prevailing understanding among business practitioners tends to frame corporate responsibility as primarily philanthropic or altruistic, rather than as a set of structured frameworks with measurable outcomes (SECP, 2023). Even where enterprises at the SGB tier have a genuine impulse toward impact disclosure, it rarely gets translated into any form that is legible to the institutional investors and development finance organisations they might otherwise attract.This matters because the regulatory momentum now underway is not neutral in its effects. As ESG-aligned disclosure becomes standard practice for listed companies, and as institutional investors increasingly screen their portfolios against these standards, the gap between enterprises that can speak the language of impact measurement and those that cannot will widen. The enterprises on the wrong side of that gap will become progressively invisible to exactly the capital flows that could most benefit them.
Why the Timing Matters
Pakistan's ESG mandate coincides with a period of significant stress in the country's enterprise financing ecosystem. Total disclosed equity funding fell to just USD 22.5 million in 2024, down from USD 75.8 million in 2023, a drop of over 70 percent and the lowest figure since 2018 (Data Darbar, 2025). All-women founding teams received zero funding that year, a complete reversal from 2023 when women-led startups raised over USD 10 million. Angel and accelerator participation shrank to just 6 percent of deals, reflecting a more risk-averse environment across the board (Data Darbar, 2025).These numbers describe the formal venture-tracked ecosystem. The story below that threshold, among the social and growth enterprises that operate entirely outside venture radar, is less documented but no less consequential. Pakistan's population of 241.5 million, with 65 percent under the age of 30, represents a genuine demographic opportunity for economic growth and innovation (i2i, 2024). Estimates suggest the digital economy could generate Rs 9.7 trillion in value by 2030, but unlocking that potential requires targeted support for women entrepreneurs, improved infrastructure, and a regulatory environment that enterprises at scale can actually navigate (i2i, 2024).Impact investors working in this space, providing patient capital to enterprises the formal VC ecosystem will not touch, are the actors who need reliable, comparable impact data from the enterprises they support. Without it, they cannot report credibly to their own donors and development partners. Without credible reporting, they cannot mobilise additional capital. The chain of accountability that makes impact investing viable depends, at every link, on enterprises being able to articulate and document their social and environmental performance in ways that others can trust.Pakistan's new ESG disclosure regime creates an opening, and a pressure, to begin closing this gap. But closing it requires more than extending reporting obligations downward through the enterprise size spectrum. It requires building the analytical infrastructure, the frameworks, the tools, and the institutional capacity, that would allow SGBs to engage meaningfully with impact measurement in ways proportionate to their scale.
Three Gaps That Are Receiving Very Little Attention
Three questions in particular deserve sustained analytical attention, and are currently getting almost none.The first concerns corporate capital flows into Pakistan's social and growth enterprise ecosystem. Pakistan's large corporations and family conglomerates spend considerable sums on corporate social responsibility and community investment. But very little of this is channelled into structured investment in social enterprises or SGBs. Most of it flows through philanthropic channels, event sponsorships, or incubation partnerships that function more as visibility exercises than genuine investment relationships. As mandatory ESG reporting raises the stakes for how corporate impact is measured and disclosed, there is a real opportunity for Pakistan's private sector to redirect some of this expenditure toward forms of engagement that generate measurable, reportable, and investable outcomes. Nobody has mapped this landscape systematically, or articulated this opportunity in any structured way.The second gap sits on the demand side of the impact investment equation. Pakistan's incubators, accelerators, and development finance organisations frequently describe an investment readiness problem among the enterprises they support. But investment readiness is rarely defined consistently, and the structural factors that produce it, or prevent it, have not been rigorously examined in Pakistan's specific context. Women-led enterprises, green economy ventures, and enterprises in conflict-affected or geographically marginalised regions face barriers to investment readiness that are qualitatively different from those facing urban tech startups. Mapping these barriers and identifying what interventions can most efficiently address them is analytically tractable through desk-based research. It has not been done.The third gap relates to impact measurement itself. Pakistan now has dozens of incubation and acceleration programmes, most of them donor-funded or government-linked, and most of them making impact claims to their principals. There is no published comparative analysis of the measurement frameworks these programmes use, whether their outputs are comparable, or whether the impact claims they make hold up to any form of external scrutiny. As international development finance becomes more selective and ESG-aligned disclosure becomes standard practice upstream, this measurement gap will have direct consequences for how Pakistan's incubation ecosystem is funded and evaluated.
What Manāra Is Exploring
This piece is the first of a series of analytical interventions Manāra is developing under its Growth and Innovation Ecosystems workstream, at the intersection of enterprise development, ESG transition, and impact capital in Pakistan.Over the coming months, Manāra will be examining three connected lines of inquiry. The first is a mapping of how Pakistan's private sector currently channels corporate capital toward social and growth enterprises, and what the SECP's new disclosure regime means for how this engagement is structured, measured, and reported. The second is an investment readiness assessment examining the structural barriers that prevent Pakistan's social, green, and women-led enterprises from accessing patient capital, with a focus on the sub-threshold segment that existing ecosystem reports consistently undercount. The third is a comparative review of social impact measurement frameworks in use across Pakistan's incubation and acceleration landscape, with the aim of identifying where coherence is possible and what a more institutionally grounded approach might look like.These are not exclusively academic questions. They carry direct implications for how development finance organisations design their programming, how corporate actors structure their ESG strategies, and how policymakers calibrate the regulatory environment for enterprise development.
What We Are Asking
These are the questions driving Manāra's work in this space. They are not rhetorical. We are actively pursuing answers to each of them, and we expect those answers to be partial, contested, and worth arguing about.
On the ESG transition and enterprise development: Pakistan's ESG disclosure regime was designed for listed companies. What would a proportionate, useful equivalent look like for social and growth enterprises operating below the listing threshold, and who should design it? As institutional investors increasingly screen portfolios against ESG standards, what happens to the enterprises that cannot yet speak that language? Does the gap widen, or do new intermediaries emerge to bridge it?
On corporate capital and social impact: Pakistan's large corporations spend significant sums on CSR and community investment. How much of this flows toward social enterprises and SGBs in ways that are structured, measurable, and investable, as opposed to philanthropic and episodic? Does anyone actually know? As mandatory ESG reporting raises the stakes for how corporate impact is measured and disclosed, does this create a genuine commercial incentive for the private sector to redirect CSR toward more structured forms of enterprise engagement?
On investment readiness and the demand side of impact capital: Investment readiness is frequently cited as a barrier to enterprise growth in Pakistan. But readiness for what, on whose terms, and as defined by whom? Are the criteria used by impact investors in Pakistan fit for the enterprises they claim to serve? Women-led enterprises, green economy ventures, and enterprises in geographically marginalised regions face structural barriers that urban tech startups do not. Are these barriers being named and addressed, or are they being absorbed into generic capacity-building programmes that were not designed for them?
On impact measurement across Pakistan's incubation ecosystem: Pakistan now has dozens of incubators and accelerators, most of them making impact claims to donors and government. Are these claims comparable, credible, and actionable? What would it take to find out? Is there a coherent national approach to social impact measurement in the enterprise development space, and if not, who should build one?
What Are We Missing?
Desk Notes is, by design, exploratory. We write to think, not only to conclude. If you are working on any of these questions, if you disagree with the framing, if you have data or experience that complicates or challenges the picture drawn here, we want to hear from you.Reach us at manara.policy@gmail.com
References
Data Darbar. 2025. Tech & VC Landscape 2024: A Market Reset, Not a Meltdown. Karachi: Data Darbar. https://insights.datadarbar.io/tech-and-vc-landscape-2024-report/Invest2Innovate (i2i). 2024. Pakistan Startup Ecosystem Report 2024. Islamabad: Invest2Innovate. https://invest2innovate.com/pakistan-startup-ecosystem-report-2024/International Sustainability Standards Board (ISSB). 2023. IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. London: IFRS Foundation. https://www.ifrs.org/issued-standards/ifrs-sustainability-disclosure-standards/S&P Global. 2026. "Where Does the World Stand on ISSB Adoption?" S&P Global Sustainable1. January. https://www.spglobal.com/sustainable1/en/insights/regulatory-tracker/issb-january-2026Securities and Exchange Commission of Pakistan (SECP). 2023. Corporate Governance and ESG: Regulatory Outlook and Market Readiness. Islamabad: SECP.Securities and Exchange Commission of Pakistan (SECP). 2024. Phased Adoption of IFRS Sustainability Disclosure Standards S1 and S2: Regulatory Notification. Islamabad: SECP. https://www.secp.gov.pkUnited Nations Global Compact. 2004. Who Cares Wins: Connecting Financial Markets to a Changing World. New York: United Nations. https://www.unglobalcompact.org/library/5United Nations Principles for Responsible Investment (UN PRI). 2024. Annual Report 2024. London: PRI Association. https://www.unpri.org/about-PRI/annual-report