CLB SFC issued External Circular 005 and corresponding annex, with instructions for integrating ESG factors into disclosure mechanisms for collective investment funds.
Document dated Mar. 21, 2024, received from CLB SFC Apr. 4, summarized on Apr. 8.
Circular Overview
Benefits have been derived from the analysis of ESG risk factors, including climate risk factors, in investment decision-making and risk management for financial markets.
Increase the resilience of the real economy and the stability of the financial system.
Necessary to have transparency rules that allow investors to make informed decisions.
Transparency rules further mitigate the risk of greenwashing or sustainable-washing.
Key Highlights
Instructs on integrating ESG factors in information disclosure mechanisms of collective investment funds, specifically for the regulations, prospectus and performance reports.
Modifies subsection 2.2 of chapter III of title VI of part III of the basic legal circular.
Adds subsections 4.8, 4.9 to chapter III of title VI of part III of the basic legal circular.
Also modifies annexes 1, 2, 3 and 5 of title VI of part III of the legal basic circular.
Exempts investment funds currently in process of liquidation, as well as those that are in the period of divestment in accordance with the provisions of their regulations.
Effectiveness
Entities have 9 months to comply with the instructions contained in the circular.
