Logo of Phnom Penh Post newspaper Phnom Penh Post - The ASEAN Sustainable and Responsible Fund Standards

The ASEAN Sustainable and Responsible Fund Standards

Content image - Phnom Penh Post

The ASEAN Sustainable and Responsible Fund Standards

As more capital is directed towards realising global sustainable development goals (SDGs) and climate targets, the global sustainable fund segment has expanded exponentially.

Globally, the size of sustainable funds reached $2.7 trillion in 2021, an increase from $195 billion in 2010, with a compound annual growth rate (CAGR) of 27 percent.

From 1,304 funds in 2010 to 5,932 funds in 2021, the overall number of sustainable funds increased at a CAGR of 15 percent within the same period.

Similarly, sustainable investment has gained traction within the ASEAN region, and in line with the Roadmap for ASEAN Sustainable Capital Markets’ recommendation on catalysing products and enabling access to under-served areas, the ASEAN Sustainable and Responsible Fund Standards (ASEAN SRFS) has been developed by the ASEAN Capital Markets Forum (ACMF) to further expand the range of sustainable investments in ASEAN.

The ASEAN SRFS aims to provide the minimum disclosure and reporting requirements that can be consistently applied to collective investment schemes (CIS) that seek to qualify under the ASEAN SRFS, considering the rise of CIS with ESG investment focus and the need for a comparable, uniform and transparent disclosure of information to mitigate the risk of greenwashing and assist investors in making more informed investment decisions.

In light of this, the CIS or CIS operator, as the case may be, must demonstrate compliance with the ASEAN SRFS, which provides additional disclosure of information of the qualifying CIS.

Key features of the ASEAN SRFS

(a) Naming convention

The name of the qualifying CIS should accurately and proportionately reflect the sustainability features of the CIS, without overstating or overemphasising the sustainability features, or being misleading.

(b) Sustainable investment objectives and strategies

CIS should primarily invest in securities in accordance with sustainable investment objectives and strategies, with a minimum asset allocation of at least two thirds of its net asset value.

Examples of sustainability principles and investment strategies are provided in the ASEAN SRFS as guidance.

However, CIS merely adopting ESG integration strategy or negative screening strategy to seek financial returns without having a sustainable investment objective would not qualify under the ASEAN SRFS.

(c) Policies and procedures to ensure compliance

Disclosures on the processes in place to ensure CIS’ compliance with the ASEAN SRFS throughout its life cycle are also required under the ASEAN SRFS.

(d) Third party verification

Third party verification can be made on a voluntary basis, to verify that the CIS’ investments are aligned with its sustainable investment objectives and strategies.

(e) Periodic reporting

The CIS or CIS operator is required to provide relevant information pertaining to the CIS’s sustainable investment objectives and strategies and a review on its sustainability considerations in its interim or annual reports, where applicable, which should be published on a website.

In addition, CIS with impact investing strategies are also required to publish an impact report annually.

(f) Revocation of qualification

The CIS or CIS operator must provide relevant information, ie: material events that could affect the CIS’s compliance to the ASEAN SRFS, to the securities regulator in the respective ASEAN jurisdiction.

Once the CIS is found to be no longer compliant with the ASEAN SRFS, the securities regulator may revoke the qualification of the CIS.

Harnessing sustainability for future growth

Sustainable investments are essential to accelerate the global transition towards net zero.

By 2036, it is expected that the global sustainable investing market will grow to $160 trillion.

The asset and fund management sector in the ASEAN region must capitalise on these trends and step up efforts to provide investors with a greater selection of sustainable investment options.

This involves the emergence of more innovative sustainable fund products that cater to the needs and interests of investors.

As the sustainable fund universe evolves more rapidly, there are more demands for detailed and consistent disclosures, as well as a growing need for measures to mitigate concerns over greenwashing.

Hence, the ASEAN SRFS aims to provide the minimum baseline on the disclosures and reporting requirements of sustainable funds that are offered within the ASEAN region, which in turn, would enhance the consistency and transparency of information to investors.

The ASEAN SRFS can be accessed at https://www.theacmf.org/initiatives/sustainable-finance/asean-sustainabl....

MOST VIEWED

  • 12th Cambodia int’l film festival to see return of Hollywood star

    Phnom Penh is set to come alive with the magic of cinema as the highly anticipated 12th Cambodia International Film Festival (CIFF) takes centre stage. Boasting an impressive line-up of 188 films from 23 countries, including captivating shorts, feature films, documentaries and animation, the festival promises an

  • Bareknuckle champion wants Kun Khmer fighter

    Dave Leduc, who is the current openweight Lethwei boxing champion in Myanmar, has announced that he will travel to Cambodia this year to challenge SEA Games gold medallist Prum Samnang any time that is convenient, after their planned match later this month in Slovakia was

  • Struggling Battambang artist dreams of staging full-scale gallery exhibition

    Leav Kimchhoth, a 55-year-old artist from Battambang province, is a familiar face to locals and tourists alike on the streets of the riverside in Phnom Penh. The one-armed painter and illustrator often hawks his work near the night market on weekends and public holidays. He

  • Fresh Covid warnings as Thai hospital fills

    A senior health official reminds the public to remain vigilant, as neighbouring countries experience an increase in Covid-19 cases, with the latest surge appearing to be a result of the Omicron XBB.1.5 sub-variant. Or Vandine, secretary of state and spokeswoman for the Ministry of Health,

  • New Law on Taxation comes into effect

    Cambodia has enacted the eagerly-awaited new Law on Taxation, which aims to improve the national tax regime’s compliance with present and future international standards and economic conditions; encourage accountability, effectiveness and transparency in the collection process; and promote investment in the Kingdom. King Norodom

  • Five-year-old Hanuman dances his way into hearts of Cambodia

    A young talent from a new-established settlement has emerged, captivating the online world with his mesmerising performances of the traditional Cambodian monkey dance. Roeun Kakada is a five-year-old prodigy who has taken the social media sphere by storm with his exceptional dance skills and dedication