Philippines reveals first look at proposed ASEAN sustainability funds standard

The Philippine Securities and Exchange Commission (SEC) is seeking feedback on an upcoming regional standard for sustainability-focused investment funds in Southeast Asia.

The ASEAN Sustainable and Responsible Fund Standards (SRFS) is the second initiative to be launched under ASEAN’s sustainable finance roadmap, following the publication of a draft green taxonomy at the end of 2021.

The consultation documents indicate that the SRFS will centre around periodic disclosure and reporting requirements covering fund sustainability objectives, ESG investment processes, the use of reference benchmarks and naming conventions.

Fund administrators will be required to apply the SFRS to existing ESG products and will be subject to regulatory monitoring to ensure compliance with disclosures.

With regards to the composition of ESG funds, the SEC said that it will be engaging asset managers in the region on further “technical requirements and feasibility considerations”.

The consultation is also asking for input on what an ESG product should entail. Respondents have been asked their views on whether “variation in [the proportion] ESG-compliant securities be acceptable to investors” and if there is a “a certain threshold or change of features that can be tolerated by investors”.

Stakeholders will only have until tomorrow to submit feedback to the consultation, which closes just over a week since it was launched.

The regulator declined to comment on the consultation timeline and other features of the SFRS.

The Philippines appears to be the first of ASEAN’s 10 member states to consult on the SFRS. The regional bloc has emerged as an early mover on ESG and sustainable finance in the emerging markets, with Malaysia, Singapore and Thailand in varying stages of deploying national green taxonomies.

Regulators in the three jurisdictions did not respond to RI’s enquiries on the SFRS.

Other initiatives included in the ASEAN sustainable finance roadmap include developing standards for transition finance, ESG indices to enable effective benchmarking, incentives for issuing ESG products and improving market access for ESG products.

ASEAN regulators met last week to monitor member state progress on the roadmap according to meeting notes.