Islamabad (Commerce Desk) — A major development in sustainable finance has been introduced as the Securities and Exchange Commission of Pakistan (SECP) has issued the country’s first ESG (Environmental, Social, and Governance) mutual funds framework.
Under the new framework, asset management companies will be able to launch ESG mutual funds. According to SECP, the initiative aims to encourage companies to adopt better environmental, social, and governance standards.
The framework states that ESG mutual funds will invest in companies that follow principles of environmental responsibility, social welfare, and strong corporate governance. Equity ESG funds will invest in companies included in the Pakistan Stock Exchange Sustainability Index.
Similarly, debt ESG funds will invest in green, social, and sustainability-linked financial instruments. Under the new rules, at least 50 percent of ESG fund assets must be invested in ESG-compliant opportunities.
SECP said the framework will help prevent greenwashing and strengthen investor confidence, marking an important milestone in the country’s sustainable finance agenda.
It is worth noting that ESG disclosure guidelines, IFRS sustainability standards, ESG Sustainable Platform, and Pakistan Green Taxonomy have already been introduced earlier.