Industry Consultation on ASEAN Sustainable and Responsible Fund Standards (SRFS)

February 8, 2022 CORPORATE GOVERNANCE AND FINANCE DEPARTMENT TO : Investment Companies Fund Managers Other Entities/Persons Dealing with an Investment Company SUBJECT : Industry Consultation on ASEAN Sustainable and Responsible Fund Standards (SRFS) NOTICE We request your comments and/or feedback on the proposed features and recommendations for the proposed ASEAN Sustainable and Responsible Fund Standards (SRFS). The written views and answers to the attached survey questions must be submitted to the Corporate Governance and Finance Department (CGFD) via electronic mail at [emailprotected] on or before 17 February 2022 (Thursday) . Please use the attached template in submitting your views on the proposal for the ASEAN SRFS. Issued on February 8, 2022. ATTACHMENT Brief Background and Proposed Features of the ASEAN Sustainable and Responsible Fund Standards (SRFS) The ASEAN Capital Markets Forum (ACMF) has identified the development of ASEAN Sustainable and Responsible Fund Standards as a priority under the Roadmap for ASEAN Sustainable Capital Markets (Priority Area II). In such regard, the ACMF will explore the feasibility of developing sustainable and responsible fund standards and will consult the Fund Managers in the region on the technical requirements and feasibility considerations. Below are the proposed recommendations for the development of the ASEAN SRFS: CAIHTE Item Description 1. Objective of standards To provide disclosure and reporting requirements that can be consistently applied by fund managers in the ASEAN jurisdiction 2. Scope Applicable to new or existing ESG/SRI/Sustainability-related funds which are authorised by the respective ASEAN regulators and issued by FMCs based in the ASEAN jurisdiction 3. ESG/SRI/Sustainability-related investment strategies and objectives Disclosures on the ESG/SRI/sustainability investment strategies and objectives of the funds are required 4. Processes to ensure funds' ESG compliance Disclosures on the processes in place, to ensure the funds' ESG compliance are maintained , e.g. , processes when investments are inconsistent with funds' ESG objectives, processes when material changes are made 5. Use of reference benchmarks or indices Details on the reference benchmarks/indices used, if available , and how they are aligned with the funds' ESG strategies and objectives 6. Naming convention of funds Qualified funds can be named/profiled as an ASEAN Sustainable and Responsible Fund and will be listed on a dedicated webpage on the ACMF website 7. Periodic reporting FMCs are required to prepare the annual reporting of the ESG/SRI/sustainability-related funds that should include information relating to the funds' ESG/SRI/Sustainability-related investment strategies and objectives, as well as a review on the funds' sustainability aspects. FMCs are also encouraged to provide more frequent periodic reporting which would increase transparency and investor confidence 8. Ongoing monitoring Regular monitoring by the FMC of the ESG/SRI/Sustainability-related funds are required to ensure that the funds are continuously in compliance with the disclosures made and fund managers are required to update the respective regulators if there are any material changes to the funds 9. Accessibility of information Relevant information and periodic reporting to be published on the website of the fund or FMC, to enhance accessibility of information to investors 10. Revocation of qualification When the funds are no longer in compliance with the ASEAN SRFS, notification to the respective regulators are required 1 Industry Consultation on ASEAN Sustainable and Responsible Fund Standards (SRFS) Name: _______________________________ Position: _____________________________ Company: ____________________________ Please provide your views on the following topics relative to the development of the proposed ASEAN SRFS: Question/s Response/s A. Overview 1.a. How do you foresee the take-up of sustainable funds in the Philippines? 1.b. Will the introduction of an ASEAN SRFS widen the pool of investors? 2. What issuance trends could we potentially see in the Philippines ( e.g. , in terms of investment styles and themes)? 3. Could there be specific themes ( e.g. , climate change, human rights, corporate governance) that investors would have a preference for when investing in sustainable funds? 4. What are some of the key considerations for investors in deciding whether to invest in sustainable funds? B. Investment objectives, strategies and processes 1. Do you think the proposed disclosure requirements are adequate, and are there any additional disclosure requirements or guidance that should be provided, and if so, what are they? 2. Any views with regards to the disclosures on the processes in place, to ensure the funds' ESG compliance are maintained? 3. Would the variation in level and status of ESG-compliant securities be acceptable to investors? Is there a certain threshold or change of features that can be tolerated by investors? 4. Are there any reservations on allowing existing ESG/SRI/Sustainability-related funds that can comply with the ASEAN SRFS to be named/profiled as an ASEAN Sustainable and Responsible Fund. If it should be allowed, what would the processes entail? 5. There have been criticism of greenwashing for sustainable funds, what are your views on how this can be mitigated? C. Reporting and monitoring 1. Whilst it is currently identified in the proposed ASEAN SRFS that fund managers are required to provide annual reporting, and encouraged to provide more frequent periodic reporting, which would increase transparency and investor confidence. Any suggestions on what is the optimal frequency of reporting by fund managers? 2. Any other suggestions especially in terms of providing more guidance and setting disclosure standards? D. Accessibility of information 1. Any suggested profiling of the ASEAN Sustainable and Responsible Funds? 2. Any suggested platforms to publish the information of the ASEAN Sustainable and Responsible Funds? Footnotes 1. Following which, the respective regulators would need to update the ACMF accordingly, which will result to the removal of the fund from the list of qualified ASEAN SRFS on the ACMF webpage.