ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has proposed the launch of Environmental, Social, and Governance (ESG) Mutual Funds to enhance sustainable investment opportunities for investors. This initiative aims to facilitate returns for investors while promoting responsible business practices and aligning with global sustainability trends.

According to Securities and Exchange Commission of Pakistan, the proposed ESG funds are a significant part of SECP’s ESG Regulatory Roadmap, targeting transparency and alignment with international standards. The roadmap includes various measures such as ESG Disclosure Guidelines, international sustainability reporting standards, and ESG data platforms to foster an ESG ecosystem.

The proposed framework mandates that a minimum of 70 percent of investments be directed towards ESG-compliant assets, with asset managers having the flexibility to adopt varied investment strategies. Additionally, the framework emphasizes strong disclosure and governance standards to prevent greenwashing and build investor confidence.

Equity-based ESG funds will align investments with the upcoming Sustainability Index of the Pakistan Stock Exchange, while debt-based funds will focus on green, social, and sustainability-linked instruments. SECP has invited stakeholders to provide feedback on the consultation paper available on its website by April 21, 2026.