SECP introduces ESG funds to drive green investments
MG News | April 06, 2026 at 01:05 PM GMT+05:00
April 6, 2026 (MLN): The Securities and Exchange Commission of Pakistan (SECP) has released a concept paper proposing ESG (Environmental, Social, and Governance) mutual funds to encourage environmentally friendly investments across the country.
This initiative aims to promote sustainable finance,
enhance corporate governance and align Pakistan with global standards of
responsible investing.
Under the proposed framework, ESG mutual funds will
primarily invest in companies that prioritize environmentally friendly
operations.
At least 70% of the fund’s capital will be allocated to
sustainable and eco-friendly projects, ensuring that the majority of
investments directly support environmental goals.
The framework also focuses on improving corporate
governance, encouraging transparency, and fostering responsible business
practices within companies participating in ESG initiatives.
To prevent misleading claims about environmental
compliance, commonly known as greenwashing, SECP has provided clear guidelines
for fund managers.
Additionally, ESG mutual funds will be aligned with the Pakistan
Stock Exchange’s proposed Sustainability Index, ensuring consistency with
broader market standards for sustainable and responsible investment.
Debt funds will also be allowed to participate by
investing in green, social, and sustainability-focused financial products.
The SECP has opened the ESG mutual fund concept paper for
public consultation, allowing investors, stakeholders, and financial
institutions to provide feedback on the proposed framework.
Experts believe that ESG funds will not only support
environmental sustainability but also offer investors an opportunity to earn
returns while promoting socially responsible business practices.
With global demand for sustainable finance growing
rapidly, SECP’s initiative marks a significant step toward establishing
Pakistan as a hub for green investments and responsible corporate governance,
supporting both environmental and social development objectives.
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