Framework-for-ESG-Mutual-Fund

No. SCD/CIRCULAW2026/369                                                                   June 24. 2026 Circular No. 12 oi 2026 Subject:         Categorization of Open-End Collective Investment Schemes In exercise of the powers conferred under section 28 n B(3) of the C)mpanies Ordinance, 1984 read with sub-regulation (2) of Regulation 55 of the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the "Regulations"), the Securities and Exchange Commission of Pakistan (the "Commission'), is pleased to all(N a type of Collective Investment Scheme (CIS) to be categorized as "ESG Scheme" subject to compliance with the following requirements: - (l ) An ESG Scheme shall operate within the existing categonzation (e.g., Equity, Income, Balanced, Asset Allocation, Index Tracker, Shariah Compliant etc.), subject tu compliancv with the additional requirements specified herein. Any scheme unw•er the ESG catvg ry shall be launched with uny of the f0110"Zng stratvgics: - (i) Screening - Exclusion of investment in certain sectors, proj ects or companies undertaking certain business activities or practices from a portfolio for their poor ESG performance re:ative to industry peers or based on specific ESG criteria e.g., avoiding particular products. services or business practices).  Integration • Systematic assessment of quantitative and qualitatfte data and exn lkcit inclusion of environmental, social and governance factors in investment analysis. Best-in-Class/Positive Screening Invest in top ESG pa-formers in a i.e. prioritizing investment in sectors, companies or projects that demonstrate positive ESG performance relative to Indusfry peers. Impact Investing — Investments made with the intention to generate positive, measurable social and…