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Corporate Laws Central Ministry of Finance Securities and Exchange Board of India Act, 1992

New category of Mutual Fund schemes for Environmental, Social, and Governance (ESG) Investing and related disclosures by Mutual Funds

20-Jul-2023 | SEBI/HO/IMD/IMD-I ?PoD1/P/CIR/2023/125

SEBI has issued a circular regarding the New category of Mutual Fund schemes for Environmental, Social, and Governance (ESG) Investing and related disclosures by Mutual Funds. By virtue of this circular, the following measures shall be taken to facilitate green financing with a thrust on enhanced disclosures and mitigation of greenwashing risk: 1. Introduction of a separate sub-category for ESG investments under the thematic category of Equity schemes. Any scheme under the ESG category shall be launched with one of the following strategies i.e., Exclusion, Integration, Best-in-class & Positive Screening, Impact investing, Sustainable objectives and Transition or transition-related investments. 2. Mutual funds can launch only one ESG scheme under the thematic category of equity schemes. 3. These measures will facilitate green financing with a thrust on enhanced disclosures and mitigation of greenwashing. 4. Mutual Funds shall clearly disclose the name of the ESG strategy in the name of the concerned ESG fund/scheme. 5. Annual Fund Manager commentary and disclosure of case studies. 6. The board of directors of Asset Management Company (AMCs) shall certify the compliance of ESG schemes with the regulatory requirements including disclosures in the annual report of the scheme, based on a comprehensive internal ESG audit.

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