India’s market regulator, the Securities and Exchange Board of India (SEBI), on Tuesday introduced guidelines governing the withdrawal of ESG ratings, amid ongoing scrutiny of sustainability disclosure requirements for listed companies.
Under the new framework, ESG rating agencies may withdraw a rating if a company fails to file its Business Responsibility and Sustainability Report (BRSR) or if there are no subscribers for its ESG rating. Additionally, when assessing a particular security, the rating may be withdrawn if it has been maintained for at least three years or for half the security’s tenure.
The move follows recent comments by SEBI Chairperson Tuhin Kanta Pandey, who saidthat the regulator is reviewing ESG disclosure rules. Industry stakeholders have raised concerns that current requirements on environmental, labour, and social reporting are overly burdensome.
The updated norms also set out provisions for the registration and functioning of ESG rating providers, further aiming to bring transparency and consistency to India’s ESG ratings framework.
The development comes as regulators in other regions also revisit sustainability reporting obligations. The European Commission has proposed exempting smaller businesses from parts of the EU’s corporate sustainability reporting rules, while the U.S., under former President Donald Trump, has taken a more critical stance on ESG-related mandates. India continues to face challenges in ESG performance. Moody’s Ratings currently categorises the country as high risk in both environmental and social dimensions, underscoring the need for greater oversight and reform in sustainable finance practices.
