It has been religiously taught in the business books and institutions that business professionals should always seek profit / wealth maximization in all instances. Apparently, with a narrow focus, this approach may seem to be obvious however in the long run businesses start facing some worse consequences out of this approach resulting in threats to their going concern and business continuity.
The modern world has now started to raise objections to this “maximization” approach and is rather looking for an optimized and balanced approach for increasing wealth and making profits. There has been horrible incidents in the past, like of Gulf of Mexico Oil Spillage, which has made people living in the age of internet (Industry 4.0) to learn fast from such incidents and readjust themselves to fulfill the needs of all business related stakeholders which not only include shareholders but also other key market players such as regulators, customers, employees, environment, society and more.
People in the business world have now understood the fact that they cannot smoothly make profits when they are polluting the environment, when there are health and safety issues or when there has been serious governance issues in their management. It is time to keep a balanced approach, it is time to act with responsibility and it is time to ensure understanding and meeting the needs of all business related stakeholders.
Only by acting responsibly, businesses can get better access to capital, market and people. Even banks are taking a three pronged approach to running businesses in the society by focusing on having sustainable business facilities, responsible investing and compliant disbursement of funds. Banks and other financial institutions are intending to go deeper in their understanding of relevant business stakeholders, especially customers by knowing them through “Know Your Customer” (KYC) forms. Moreover, there are comprehensive checklists handed over to decision makers by the management to ensure compliance in every aspect and not just from the point of view of financial health of a business. Green Banking Guidelines have already been issued by State Bank of Pakistan for Banks in Pakistan
The world is now figuring out ways for keeping a net zero approach. Focus is being given to both quantitative and qualitative aspects of sustainability by keeping environment, social and government (ESG) related issues in mind. There are now accreditation bodies across the globe such as Green Building Council, Global Reporting Initiative, Better Cotton Initiative and more which are pushing businesses across the globe to become and remain more sustainable. Furthermore, accounting bodies around the world have also stepped forward with their contribution in terms of keeping standardized approach to sustainability reporting such as through Sustainability Accounting Standards Board (SASB).
Pakistan, with abundance of natural resources and availability of different weather seasons, can also witness sustainable and inclusive growth by not only raising awareness on ESG related issues not only on business forums but also for the general public (even through school and college education as well). By raising the bar of the business world in Pakistan through compliance with ESG related issues, our economy can not only improve its image in the rest of the world but by becoming responsible citizens and businesses we can also witness a sustainable economic growth leading to prosperity of the nation.
Syed Adeel ur Rahman
The writer is a Chartered Certified Accountant (ACCA) and holds a Masters Degree in Energy from the UK while having worked with various MNCs and consulting firms in Pakistan and London.