Pakistan has officially decided to reactivate the Clean Environment Fund Company (CEFC), an entity that has remained dormant for more than a decade since its inception. The decision marks a significant shift in the country's approach to environmental governance, as the company is set to resume operations to mobilize and utilize resources specifically designated for environmental initiatives. This revival places the CEFC under the operational umbrella of the Pakistan Environmental Protection Agency (PEPA), aligning its activities with broader national environmental objectives.
Cabinet Approval and Governance Structure
The move was authorized by the Cabinet Committee on State-Owned Enterprises, a body chaired by Finance Minister Muhammad Aurangzeb. The committee formally approved the request submitted by the Ministry of Climate Change and Environmental Coordination to bring the CEFC back into active status. As part of this restructuring, an official statement indicated that the board of directors will be reconstituted to ensure proper oversight and management. The new governance structure is to include two ex officio members and three independent directors, a composition designed to balance administrative continuity with independent oversight.
In addition to the CEFC, the committee also approved the appointment of new members to the boards of directors of several other state-owned enterprises. This broader review of corporate governance within the state sector suggests a concerted effort to address compliance issues and improve operational efficiency across public entities. The focus on the CEFC, however, highlights a specific priority to address long-standing gaps in environmental funding and project execution.
Background on the Dormant Entity
The Clean Environment Fund Company was originally established in 2015 as a non-profit entity under Section 42 of the Companies’ Ordinance. Its primary mandate was to support the protection, conservation, restoration, and improvement of the environment by raising and deploying financial resources for various environmental projects. Despite this clear mission, the company failed to hold any board meetings or conduct annual general meetings as required by law. Specifically, it did not comply with the stipulations of Section 132 of the Companies Act, which mandates regular general meetings to ensure accountability and transparency.
The prolonged inactivity of the CEFC drew repeated attention from state auditors, who flagged violations of legal requirements. The Auditor General of Pakistan noted these failures in official reports, highlighting the absence of essential corporate governance practices. The current decision to activate the fund addresses these historical compliance issues, aiming to transform the CEFC from a dormant legal entity into a functional instrument for environmental policy. By reactivating the company, the government intends to create a dedicated channel for environmental funding, potentially enhancing the scale and impact of conservation and restoration efforts across the country.
