MAS mandates disclosures and reporting for retail ESG funds

July 2022

MAS has issued notice CFC 02/2022 on disclosure and reporting guidelines for retail ESG Funds being an authorised or recognised scheme under the Securities and Futures Act 2001, that uses or includes environmental, social and governance (ESG) factors as its key investment focus and strategy and that represents itself as an ESG-focused scheme.

The Circular provides guidance on the naming of ESG Funds. Where the fund’s name includes ESG or green related terms, the fund should have an ESG focus as a substantial component of its investment portfolio or strategy, otherwise the name will be considered inappropriate.

The Circular sets out disclosure requirements for prospectuses and annual reports of ESG Funds. A prospectus should disclose the fund’s investment focus, investment strategy (and how the strategy is implemented on a continuous basis), the reference benchmark used and risks associated with an ESG focus and investment strategy. The annual report should include a narrative on how and the extent to which its ESG focus has been met during the financial period under review, and a comparison with the previous period, among disclosure requirements.

The Circular also requires additional information to be disclosed on the ESG Fund manager’s website (where appropriate), including (a) how the fund measures and monitors its ESG focus, and the related internal or external control mechanisms used to monitor compliance on a continuous basis; and (b) the due diligence carried out for ESG-related features of the fund’s investments.

The Circular will take effect on 1 January 2023.