Sebi has extended the deadline for comments on the new disclosure rules for mutual funds with ESG focus

On Tuesday, the Securities and Exchange Board of India (Sebi) extended the deadline for submitting views on new disclosure standards for mutual fund schemes with an ESG (environment, sustainability, and governance) focus until December 1

The proposed regulations are intended to ensure that ESG-focused mutual fund schemes stay faithful to their labels.

On October 26, the markets regulator released a consultation paper for implementing disclosure standards for ESG mutual fund schemes, asking for feedback by November 16.

“It has been agreed to extend the deadline for submission of views to December 1, 2021,” Sebi stated in a notice on Tuesday.

The regulator proposed numerous disclosures in the Scheme Information Documents (SID) in its consultation paper to ensure that the scheme’s strategy, in terms of sustainability or ESG features, merits the designation of an ESG fund.

The proposal mandates that investment funds only invest in securities that carry BRSR disclosures or similar disclosures in the case of offshore securities. For each security, a link to the BRSR disclosure or an equivalent should be supplied.

Though the regulator has proposed not deviating too much from the scheme philosophy for the remaining 20% allocation, even though the mandated allocation for securities with an ESG theme is at least 80% and the disclosure norms apply only to these securities, the regulator has proposed not deviating too much from the scheme philosophy for the remaining 20% allocation.

Investments should be planned to have a positive ESG/sustainability impact in addition to a financial return, according to the regulator.

It advocated enhanced disclosure to track and analyse investments and ensure that they include investment techniques that fulfil ESG investment requirements.

It also recommended that portfolio disclosures be made on a regular basis to keep investors informed about their assets.

There were eight ESG Thematic equity plans in India as of September 2021, with Rs 12,085 crore in assets under management. With asset bases of Rs 174 crore and Rs 144 crore, respectively, there is one ESG ETF and one ESG ETF Fund of Fund.