On 2 July 2021, the FSC announced a disclosure rule for ESG funds issued by Securities Investment Trust Enterprises (SITEs) to strengthen the integrity of the prospectus on ESG investment funds.
The key points of the aforementioned supervisory principles for review of ESG fund disclosures are as follows:
1.When a SITE offers an ESG fund, the issuance plan, prospectus, and other such documentation must disclose at least the following: ESG investment objectives and measurement standards; investment strategies and methods; investment ratios and allocations; performance indicators; exclusion criteria; risk warnings; participation in stewardship; and regular disclosures.
2.An existing ESG fund whose prospectus does not make all of the aforementioned disclosures must correct the deficiency within six months of the date of issuance of the review principles.
3.For an existing non-ESG fund whose prospectus has an "Investment Strategy and Features" section that already includes references to "sustainability" and "corporate social responsibility," or whose investment strategies or asset allocations take ESG concepts into consideration, if a proposal is made to rename the fund as an ESG fund, the SITE may do so without convening a beneficiaries meeting as long as the name change would not change the product positioning or basic investment strategy of the fund. However, the SITE must file an attorney's opinion affirming that the proposed name change would not have any material impact on the interests of the beneficiaries, and apply with the FSC for approval to amend the trust agreement. The SITE must also publicly announce and inform beneficiaries of the change 30 days before the amended trust agreement enters into force.