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SEBI Forms Working Group to Review ESG Rating Providers' Regulatory Framework

The Securities and Exchange Board of India (SEBI) has established a Working Group to review the regulatory framework governing ESG Rating Providers (ERPs). This decision follows feedback from market participants regarding the current system. The group, comprising diverse stakeholders including issuers, investors, rating agencies, and legal experts, will conduct a comprehensive review and evaluate international developments. Its mandate includes recommending policy changes to enhance transparency, reliability, and investor confidence in ESG ratings within the Indian market context.

Key Points: SEBI Reviews ESG Rating Provider Regulations with New Working Group

  • Review of existing ESG rating provider rules
  • Measures to boost transparency and investor trust
  • Evaluation of international regulatory trends
  • Alignment with global best practices for Indian markets
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SEBI forms working group to review ESG rating providers' regulatory framework

SEBI forms a working group to review the regulatory framework for ESG Rating Providers, aiming to enhance transparency and align with global standards.

"recommending measures to enhance transparency, reliability, and investor confidence in ESG ratings - SEBI Press Release"

Mumbai, February 18

The Securities and Exchange Board of India has constituted a Working Group to review the regulatory framework for ESG Rating Providers.

The regulator said the decision has been taken based on feedback received from market participants and stakeholders regarding the existing regulatory framework.

SEBI said in a press release on Wednesday that the Working Group comprises representatives from issuers, Investors/ESG rating users, Domestic ERPs, Global ERPs, ESG analysts, legal experts and academia.

The terms of reference of the Working Group include undertaking a comprehensive review of the existing regulatory framework governing ERPs and examining representations and suggestions received from the market participants.

The other terms of reference include recommending measures to enhance transparency, reliability, and investor confidence in ESG ratings; evaluating international regulatory developments in the ESG rating space; and identifying areas for alignment with global best practices, while considering the Indian market context.

The release said that the Working Group will submit its report to SEBI with findings and recommendations on policy and regulatory changes required in the ERP framework.

- ANI

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Reader Comments

R
Rohit P
Finally! The current ESG ratings are so confusing. One agency gives a company an 'A', another gives a 'C' for the same parameters. How are we supposed to make informed decisions? Standardization is key. 👍
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Aditya G
Good move, but the proof will be in the implementation. We have great regulations on paper sometimes, but enforcement is weak. SEBI needs to ensure these ratings have real teeth and consequences for misleading information.
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Sarah B
As an investor focused on sustainable funds, I welcome this. The Indian market context is crucial – our social (S) parameters around community impact and employee welfare might differ from Western standards. Hope they get that balance right.
K
Karthik V
Hope they simplify the reporting for companies as well. For MSMEs trying to be sustainable, the cost and complexity of getting rated can be a barrier. The framework should encourage participation, not just add compliance burden.
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Nikhil C
Transparency is the biggest issue. We need to know exactly what data points go into these ratings and how they are weighted. Right now, it feels like a black box. More power to SEBI for taking this up. 🙏

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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