The Environmental, Social, and Governance (ESG) landscape in India is undergoing a significant transformation. On May 16th 2024, the Securities and Exchange Board of India (SEBI) issued a master circular specifically targeting ESG Rating Providers. This move signifies a growing focus on transparency and standardization within this crucial field.

What does the SEBI master circular entail for ESG Rating Providers? 

The circular outlines a comprehensive framework governing ESG Rating Providers, emphasizing accountability and robust practices. Here’s a breakdown of the key points: 

Registration: ESG Rating Providers are now mandated to register with SEBI. This ensures a level playing field and promotes credibility within the system. 

Eligibility Criteria: Meeting the defined eligibility criteria becomes a prerequisite for registration. This ensures a qualified pool of providers with the necessary expertise. 

Transparency through Disclosures: Specific disclosures are required from ESG Rating Providers. This enhances transparency and empowers stakeholders to make informed decisions. 

Compliance Officer: The appointment of a compliance officer becomes mandatory. This strengthens internal controls and ensures adherence to regulations. 

Record Keeping: ESG Rating Providers must maintain a robust record-keeping system for documents and data. This facilitates audits and reinforces accountability. 

Addressing Audit Deficiencies: A mechanism is established for addressing any audit deficiencies identified. This ensures continuous improvement in ESG rating practices. 

Confidentiality Matters: ESG Rating Providers are obligated to uphold confidentiality when handling sensitive information. This protects the interests of stakeholders. 

The circular came into effect on May, 2024, and the Board of Directors of each ESG Rating Provider holds ultimate responsibility for compliance. Regular internal audits ensure ongoing adherence to these provisions. 

Indian vs. Global ESG Ratings 

India’s ESG space is evolving rapidly. As regulations mature, a fascinating question emerges: will companies prioritize domestic ESG ratings or strive for global benchmarking through international agencies? 

Turn your ESG intent to actions now 

Regardless of the chosen path, a robust ESG strategy is essential. Ecodrisil ESG Xpress offers a comprehensive solution to simplify your ESG journey. From insightful reporting to risk assessments and performance management, Ecodrisil empowers you to navigate the complexities of ESG with confidence. Let Ecodrisil ESG Xpress be your partner in building a sustainable future.