SEBI unveils six fresh mutual fund strategies under the ESG theme.
As per the existing regulatory norms, mutual funds can introduce just one scheme under the thematic category for equity schemes focusing on ESG investing.
In response to the global impact of the coronavirus pandemic in 2020, investors began expressing a growing interest in investing in socially responsible companies. To address this demand and expand the scope of the Environmental, Social, and Governance (ESG) thematic category, the Securities and Exchange Board of India (SEBI) has granted permission to asset management companies to introduce funds with six new ESG strategies.
Previously, regulatory requirements allowed mutual funds to launch only one scheme with ESG investing under the thematic category for equity schemes. However, recognizing the rising importance of green financing, the capital markets regulator has now taken the decision to allow mutual funds to launch multiple ESG schemes with diverse strategies to meet the evolving investor preferences.
ESG factor-based investing is gaining popularity globally, and Indian policymakers are also encouraging and incentivizing sustainable investing practices.
What is New in Strategy
According to the SEBI circular dated July 20, mutual funds can now launch ESG category schemes with a choice of the following strategies: Exclusion, Integration, Best-in-class & Positive Screening, Impact investing, Sustainable objectives, and Transition or transition-related investments.
What's Your Reaction?
