Recently Pakistan has witnessed a range of multinational firms exhibiting a trend of tax evasion. The agencies, known for creating and placing advertisements on various forms of media in Pakistan have been earning money here and sending it abroad without mentioning it under any tax bracket to handle financial transactions and report incomes. These practices are not only unethical, but also illegal and can result in significant penalties and fines. For Pakistan, such practices are hurting the already vulnerable economic situation of the country.
According to The Asia Group and Karandaaz, a not-for-profit company promoting access to finance for SMEs and individuals, Pakistan experienced $13 billion in economic loss and infrastructure damage due to the floods. Without financial inclusion tools such as insurance, Pakistani citizens bore the consequences of the floods.
In the immediate aftermath of the floods, companies worldwide pledged scores of resources to aid in relief efforts. Among the international donors were Alphabet and Meta, which pledged a combined one million dollars in aid. And while the rent-seeking economy celebrates aid without voicing its role in putting the correct measures in place to prevent the scale of damage caused by the floods, one needs to address the elephant in the room.
Greenwashing and selective activism
In avoiding a direct presence in Pakistan, particularly without a financial office, both Alphabet and Meta have evaded sales and profit taxes for over a decade of earnings from advertisers in the country. A report from Profit magazine, surveying the top two most prominent advertising agencies in Pakistan — GroupM and Brainchild — found that roughly $300 million of the two billion dollar advertising expenditure (AdEx) was diverted towards digital and social media inventory.
Taking the 13% Sindh sales tax into account and assuming ceteris paribus for AdEx growth, the technology companies worth two trillion dollars evaded over $100 million worth of topline and bottomline taxes since FY 2020. Despite earning in the Pakistani market, the use of media agencies allowed the money to leave the country without being counted as exports — which would have softened the blow to the current account deficit crisis Pakistan is sludging through.
Pakistan is not alone in this. Regulators have repeatedly questioned Alphabet in the European Union, the UK and Australia regarding its evading taxes by using consultants instead of a financial office.
Revenues diverted towards a Singapore office or a Dublin office allow the company to claim said offices deserve credit for the sale, whereas on-ground consultants play a significant role in making deals. In Pakistan alone, Alphabet has roughly 15 sales executives, while Bytedance and Meta use Jack of Digital and Dial Zero as their resellers respectively.
This is a classic example of greenwashing — making a small gesture, insignificant in the grand scheme of things, to wash off past sins or to distract from ongoing sins. It takes many forms and often needs to be better executed. In Pakistan, greenwashing has been applied to green initiatives and meaningless attempts to signal the celebration of diversity.
The reality of the outreach of green initiatives is jarring indeed. “Pakistan has witnessed 117 incidents caused by climate change, yet there is no contingency plan,” said Nazifa Butt, senior manager of the Climate and Energy Programme at the WWF, during the ‘Climate Change and Karachi – Building Coastal Resilience’ conference held in December. “Climate change has ravaged our current ecosystem and, if not addressed, will devastate our future generations. The country’s future is at stake.”
Similarly, an example is a B2B e-commerce company with tall claims about raising the largest Series A round. The company is mired by a toxic work culture and an average employee tenure of eight months. This is coupled with a brash executive director who is consistently seeking a communications associate amid mass resignations from his team.
In the digital age, with stakeholders having access to HR analytics through platforms such as LinkedIn, it is easy to close the gap between tall claims and market realities..
Meaningless attempts to signal inclusion
When a brand health tracker (BHT) study suggested that a target demographic resonated with empowering messages and overlapped with the growing popularity of women on bikes, any company jumping on the bandwagon should have included the grassroots activists that normalised women on bikes in the first place.
Instead, an American beverage corporation only used Walee influencers instead of the women who championed the cause. In seeking better aesthetics, the firm sadly overlooked the real heroines that broke a gender barrier in Pakistan. In trying to signal its diversity efforts to the market and attach itself to a grassroots effort, the said corporation has become the butt of jokes.
For companies focused on green and diversity initiatives that allow their shares and investments to fall under environmental, social, and governance (ESG) funds, a consistent and meaningful effort is the defining standard that separates the pretenders from the activists.
Consistency signals commitment
Data from Google Trends and Google News shows that TPL comes up consistently when it comes to showing a commitment towards diversity, equity, inclusion and the environment.
This has been actionably proven with consistent sponsorship-level participation in Environment Day Drive, Earth Day Lights Out, offering eco-friendly tips to their customers, and a waste management program initiated with GarbageCan, a sustainable waste management company. In trying to meet UNSDG-15 goals, TPL has made consistent and expensive efforts towards going green and reducing its carbon footprint.
As reflected in its communications to TPL shareholders, these goals have been actualised through initiatives around carbon emissions management, waste reduction, and a green office program whereby internal energy conservation and paper reduction projects are in effect. This also includes activities around improving air quality.
“At TPL, we proactively integrate sustainability into our routine decision-making processes,” says Sitvat Jamal, the group head of CSR at TPL Corp. “Dedicated to driving positive change, we are aligned with the United Nation’s 2030 Agenda for Sustainable Development goals. TPLCares, the group’s CSR platform, engages with the community via support for healthcare, education, gender equality, and sports-related initiatives.”
Action outweigh pledges
Pakistan contributes less than 1% of the global greenhouse gasses that warm our planet, but its geography makes it highly vulnerable to climate change. Pakistan is facing a number of challenges as a result of changing weather patterns and rising temperatures. As an agricultural country, the change in temperatures is affecting the yields making it challenging to grow traditional crops.
In Pakistan, solid waste is generated 0.283 to 0.612 kg/capita/day, and plastic waste accounts for the second-highest proportion of MSW, which makes it 6.41 million tons of waste plastic annually, which not only looks dirty dumped in the middle of the cities but it is harmful both for humans and the nature affecting the wildlife as well.
Solid waste also works as a breeding ground for mosquitoes, flies, and different types of insects and bacteria, causing healthcare issues for the general public. If the waste is not managed correctly and dumped into the sea it also affects marine life, corals, and mangroves which help keep a balance in the ocean.
Replacing greenwashing with public-private partnerships
Taking a leaf from the TPL playbook, initiating climate change ministries and nonprofits for field activities and awareness drives is the way to go while equipping relevant authorities with the resources to meet targets without supervision consistently.
One of the main commitments Pakistan made to the UN is to shift to 60% renewable energy, and 30% electric vehicles by 2030 and ban coal imports as well as expand nature-based solutions. The provincial governments have also been making efforts to help Pakistan fight the battle, building of small dams and the billion tree project are two major projects by the Khyber Pakhtunkhwa government.
The Sindh government along with the national government has been working on the restoration of 600,000 hectares of mangroves which are thought to be the world's most extensive dry-climate mangroves. They are also working on urban forests and plantation initiatives to improve the environment and quality of life in cities along with the reforestation of different vacant forest lands.
Working in tandem with organisations such as TPL and K-Electric, the Sindh government is working towards restoration of Karachi beach, including the cleanups and plantation of different native plants. It was reported that launching eco-friendly and electric buses for the mass transit system would decrease the emissions caused by vehicles.
Data from sentiment trackers shows that corporations ought to signal a commitment to Pakistan and align themselves with ESG funds. Sialkot’s patriotic business community are the true champions of sustainability initiatives, partaking in inclusive business practices and using coalitions and alliances to improve the cities they operate in.
Local business communities like Sialkot can play to their strength by playing an active role in improving infrastructure, and scaling back protectionist lobbying that seeks to worsen income inequality with regulatory capture, guaranteed returns and subsidised inputs.
Ali Asad Sabir is a political economist. He is working as a senior research assistant at Institute of Development and Economics Alternatives (IDEAS). All facts and information are the sole responsibility of the writer.