The Monetary Authority of Singapore (MAS), the central bank and financial regulator of Singapore unveiled new reporting and disclosure requirements for ESG funds targeted at retail investors.
Introducing the new rules at a media conference on Thursday, MAS Managing Director Ravi Menon said that the requirements were aimed at enabling investors to better understand the ESG aspects of the funds they invest in, and to reduce the risk of greenwashing, or the exaggeration or misrepresentation of the sustainability attributes of the funds.
The new rules come as investor interest in ESG has undergone significant growth, driving a proliferation of investment products and services marketed as ‘green’ or ‘sustainable,’ but without clear rules communicating to investors the actual ESG-related attributes, methodologies and criteria that are being considered in the funds.
To address these challenges, regulators in several major markets have recently introduced ESG fund labelling and disclosure rules, including a recent proposal by the U.S.’ SEC, the EU’s Sustainable Finance Disclosure Regulation (SFDR) framework, and the UK’s FCA’s requirements.
Reporting requirements introduced in MAS’ new guidelines include disclosures on details of funds’ investment strategies, criteria and metrics used to select investments, and risks and limitations associated with the funds’ strategies.
The new guidelines are expected to take effect from January 2023.
“MAS will require the disclosures to be made on an ongoing basis. Investors will receive annual updates on how well the fund has achieved its ESG focus.”