Legal framework for a New category of Mutual Fund schemes for Environmental, Social and Governance (“ESG”) Investing and related disclosures

SEBI has issued a legal framework for a New category of Mutual Fund schemes for Environmental, Social and Governance (“ESG”) Investing and related disclosures by Mutual Funds on July 20, 2023. Any scheme under the ESG category shall be launched with one of the following strategies-

1. Exclusion
2. Integration
3. Best-in-class & Positive Screening
4. Impact investing
5. Sustainable objectives
6. Transition or transition related investments

Mutual Funds shall disclose the following in their monthly portfolio statements of ESG schemes:

1. Security wise BRSR Core scores{as and when the same is made available by SEBI registered ESG Rating Provider (ERPs)},along with the BRSR scores.
2. Name of the ERPs providing ESG scores for the ESG schemes, along with the ESG scores. In case there is a change in ERP, the reason for such change shall also be disclosed in the next monthly portfolio statements of ESG schemes.