India's government has implemented the Securities and Exchange Board of India (Credit Rating Agencies) (Amendment) Regulations, 2023, which establish guidelines and regulations for Environmental, Social, and Governance (ESG) Ratings providers (ERPs).
The amendment introduces a new section to the existing Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999. It paves the way for rating agencies to operate as ERPs and outlines rules regarding their registration, eligibility criteria, code of conduct, transparency, governance, conflict of interest prevention, rating process and monitoring, review of ratings, disclosure requirements, and applicability.
This development follows a consultation paper released by the market regulator in February. It reflects the increasing recognition of the substantial economic and financial implications of climate change and ESG risks. Additionally, the Securities and Exchange Board of India (Sebi) has made it mandatory for the top 1,000 listed companies, based on market capitalization, to adhere to the Business Responsibility and Sustainability Reporting (BRSR) guidelines from the financial year 2023 onwards.
Sebi's objective in implementing these regulations is to enhance the credibility of disclosures and boost investor confidence, given the reliance of stakeholders such as investors and ESG rating providers on the information provided in the BRSR filings.
Comments