PSX Sustainability Index: Pakistan Stock Exchange launches consultation on first ESG benchmark

PSX Sustainability Index entered the public consultation phase on Monday after the Pakistan Stock Exchange (PSX) released a concept paper outlining the country’s first sustainability benchmark for listed companies.

The proposed PSX Sustainability Index (PSI) is designed to measure the performance of companies that integrate financially material environmental, social and governance (ESG) risks and opportunities into their business strategies. The initiative marks a significant step in expanding sustainable finance within Pakistan’s capital market.

Pakistan Stock Exchange Chief Executive Officer Farrukh Sabzwari said ESG considerations have become increasingly important in determining company valuations, capital allocation and long-term risk management. He said the new index aims to provide investors with a transparent and internationally comparable benchmark for identifying businesses that demonstrate long-term resilience alongside financial performance.

According to the concept paper, the PSI will function as a total-return performance index using a materiality-based scoring methodology across environmental, social and governance pillars. The framework applies sector-specific weighting to ensure companies are assessed according to the sustainability risks and opportunities most relevant to their industries.

The proposed benchmark is expected to benefit listed companies seeking greater visibility among responsible investors, institutional asset managers developing ESG-focused investment products and investors looking for structured exposure to businesses with sustainable operating models.

PSX said broad market consultation is essential to ensure the index reflects Pakistan’s corporate landscape while encouraging higher standards of sustainability disclosure across all sectors. The exchange added that stakeholder feedback will help shape a practical framework that supports continuous improvement in corporate ESG practices.

The Pakistan Stock Exchange has invited stakeholders to submit written comments on the concept paper by 17 July 2026 before the final framework for the index is developed.