The Securities and Exchange Commission has put forward a proposal for Environmental, Social, and Governance (ESG) mutual funds, mandating that at least 70 percent of their capital must be allocated to environment-friendly projects and including clear guidelines to combat “greenwashing”.
According to the regulatory body’s announcement issued today, these specialized funds aim to attract investment towards environmentally responsible corporations. The SECP also stated that the ESG framework aims to improve corporate governance and enhance transparency in participating companies.
The proposed ESG funds will be aligned with the upcoming Sustainability Index of the Pakistan Stock Exchange.
The regulatory framework will also allow debt funds to invest in a range of green, social, and sustainability-focused financial products, thereby broadening the scope of responsible investment.
To solicit feedback from stakeholders, the Commission has released a concept paper based on the details of the proposed ESG mutual funds for public consultation.