The Securities and Exchange Board of India (SEBI) has constituted a Working Group to review the regulatory framework governing ESG Rating Providers (ERPs).
The move follows feedback from market participants and stakeholders regarding the current regulatory regime for ERPs. SEBI said the review aims to address concerns and strengthen the credibility of ESG ratings in India’s capital markets.
The Working Group comprises representatives from issuers, investors and ESG rating users, domestic and global ERPs, ESG analysts, legal experts and academia.
According to SEBI, the Terms of Reference for the Group include:
- Undertaking a comprehensive review of the existing regulatory framework governing ERPs;
- Examining representations and suggestions received from market participants;
- Recommending measures to enhance transparency, reliability and investor confidence in ESG ratings; and
- Evaluating international regulatory developments in the ESG ratings space, and identifying areas for alignment with global best practice, while taking into account the Indian market context.
The Working Group will submit its report to SEBI, outlining its findings and recommendations on the policy and regulatory changes required in the ERP framework.
