[Apha Biz=(Chicago) Reporter Paul Lee] In the future, funds investing in ESG (environment, society, and governance) shall disclose their connection with ESG and investment targets in advance in securities reports and regularly report their operation progress through asset management reports.

The Financial Supervisory Service said on the 5th that such disclosure standards will be introduced to all public funds that advocate ESG funds from February next year. The size of the ESG public offering fund market soared from 1 trillion won at the end of 2018 to 8.6 trillion won as of the end of March this year, but it has been pointed out that there is no clear standard for disclosure. On the surface, the Green Washing fund, which claims to be eco-friendly, is rampant and investors' information asymmetry concerns have been raised. In response, the FSS, the Korea Financial Investment Association, asset management firms and the Korea Capital Institute have formed a task force (TF) since March this year to discuss the disclosure criteria.

If you look at the details, all public offering funds that advocate the "ESG fund" by themselves, such as including ESG in the fund name or considering ESG for investment purpose and strategy in the investment description, in the securities report, △ important information such as investment purpose and strategy △ operation capability △ operation risk and the relevance of ESG shall be disclosed in advance and the progress of operation shall be regularly reported through the asset management report.

The same applies to existing funds as well as new funds set up after the revision of the disclosure standards. Private equity funds that do not submit securities reports will also apply the same form of the revised asset management report if ordinary investors are included.

 

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