Public Comment,Response to the FSA’s Consulation on the Proposed Amendment of the Comprehensive Supervisory Guidelines for Financial Instruments Business Operators, etc. regarding ESG Investment Trusts

The FSA has published the draft partial amendments to the Comprehensive Supervisory Guidelines for Financial Instruments Business Operators, etc. between 19 December 2022 and 27 January 2023 (only available in Japanese). The FSA has received 323 comments on the draft from 56 individuals/entities, greatly appreciates those who submitted comments on the proposal.
The FSA’s responses to the comments received can be found in Attachment 1, the Summary of opinions received concerning on the Proposed Partial Amendments to the Comprehensive Supervisory Guidelines for Financial Instruments Business Operators, etc. regarding ESG Investment Trusts (Japanese and English).
Global attention is attracted by the increasing number of investment products incorporating ESG factors in their names and investment strategies, and the concerns over greenwashing that such products may not actually invest commensurately with ESG claims. Back in 2022, FSA therefore conducted a survey of 225 publicly offered investment trusts managed by 37 asset managers in Japan and compiled „Seven Expectations for Asset Management Companies managing ESG Investment Trusts“ based on the survey’s findings and published them in May 2022 in its Progress Report on Enhancing Asset Management Business 2022. As a reminder, these „Seven Expectations“ are: (1) Overarching principle; 2) Organizational structure; (3) ESG integration; (4) ESG ratings and data product providers; (5) Stewardship activities; (6) Disclosure; and (7) Outsourcing.
The FSA has thus revised the comprehensive supervisory guidelines for financial instruments business operators (investment management business) based on the aforementioned „Seven Expectations“. The amendments define specific points for supervisors to check the disclosure on publicly offered investment trusts and the organizational resources and due diligence of asset managers regarding ESG. For further details on the amendment, please refer to Attachment 2 (in Japanese) and Attachment 3 (provisional English translation).
The Comprehensive Supervisory Guidelines for Financial Instruments Business Operators, etc. have been promulgated and came into effect as of 31 March 2023.