This information paper sets out good disclosure practices that ESG Funds (authorised and recognised schemes) may adopt in their adherence with paragraph 11 to 14 of the Circular No. CFC 02/2022: Disclosure and Reporting Guidelines for Retail ESG Funds. The following is a summary of the good disclosure practices.
- Investment Focus and Strategy:
- Define ESG-related terms clearly to align investor and manager expectations.
- Examples of vague and subjective terms include “favourable/improving ESG characteristics”, “sustainable leaders” or “strong sustainability profile”.
- The definitions should ideally be contained in the same section of the prospectus describing the ESG Fund’s investment focus and strategy. Otherwise, include a cross-reference.
- Provide clear descriptions of ESG criteria or metrics used, including sources, calculation methodologies, minimum ESG ratings or scores, and basis for the sustainability targets set.
- Reference Benchmark:
- Disclose any influence the manager or its related corporation has on the construction of the ESG index.
- Risks:
- Include a summary of risks associated with the ESG Fund’s (in particular for recognised schemes) focus and strategy in the prospectus.
- Additional Information:
- Disclose details of stakeholder engagement activities, including the purpose, extent, and impact on the ESG Fund’s investments.
- Encouraged to provide updates on such engagement activities, such as actual voting records, on a periodic basis.
For the full details, please refer to the MAS website https://www.mas.gov.sg/publications/monographs-or-information-paper/2024/good-disclosure-practices-for-retail-esg-funds
Disclaimer: The information, views or opinions expressed are provided for general information and should not be relied upon as legal or professional advice.