SEBI introduces framework proposal for regulation of ESG rating agencies

Markets regulator Sebi on Monday submitted a draft proposal for regulation of firms giving environmental, social and conduct of business (ESG) ratings. In its consultation paper, SEBI said that only credit rating agencies and analyst firms with a value of more than Rs 10 crore would be considered acceptable as ESG Rating Service Provider (ERP). A listed company would be required to service only from an accredited ERP to get its rating on ESG standards. Apart from this, SEBI has also said that ESG

In its consultation paper, SEBI said that only credit rating agencies and analyst firms with a value of more than Rs 10 crore would be considered acceptable as ESG Rating Service Provider (ERP). A listed company would be required to service only from an accredited ERP to get its rating on ESG standards. Apart from this, SEBI has also said that the ESG rating providers should also mention the relevant area of ​​​​the company. For example, the carbon risk rating should not be referred to as the ESG rating.

According to the consultation paper, the ERP must offer at least one rated product. It is also proposed that ERP should always use proper terminology to avoid any doubts among the stakeholders.