SEBI is in discussion with various stakeholders to introduce guidelines for mutual fund schemes based on environmental, social and corporate governance (ESG) theme, the regulator's Chairman Ajay Tyagi said on Thursday.
"The launching of ESG themed schemes by mutual funds in India has picked up in the last year or so. We are at present engaging with the industry about disclosing certain broad ESG related parameters in respect of such schemes," he said at CII's 12th Financial Markets Summit.
At present, mutual funds are free to design their own investment strategy. Most mutual funds have their own framework in place to identify ESG compliant companies. They also refer to Nifty's ESG indices for identifying investable stocks.
Stressing on the importance of sustainable investing, Tyagi said SEBI is focused on the ESG aspect of asset management industry. "While, on one hand there is increasing demand for ESG investments & disclosures, on the other hand, there are also concerns about green washing. We are keenly watching international developments in this area," the SEBI chief said.
ESG is the new buzzword in the world of investment. Though the concept is fairly new in India, the popularity is surely rising. Mutual funds have launched numerous schemes in the category in the last few months. As of June 2021, there were 10 ESG funds in India. Of this, eight were launched in the last one year alone.
The AUM surged four times to Rs 11,800 crore as of June 2021 from Rs 2,400 in June 2019.
