SEBI Extends Timeline Until March 15 For Public Comments On Proposed ESG Rating Norms

Capital markets regulator Sebi on Wednesday extended the timeline until March 15 for submission of public comments on the proposed regulatory framework on ESG rating providers. Earlier, the deadline for submission of the comments was March 8, the Securities and Exchange Board of India (Sebi) said in a notice. The regulator had placed a consultation paper for Regulatory Framework for ESG Rating Providers (ERPs) in the securities market on its website on February 22 and sought comments on the same. "It has been decided to extend the timeline for submission of comments to March 15, 2023," the regulator said.

Under the consultation paper, ERPs can be allowed to register with the regulator under the CRA (Credit Rating Agencies) norms. Sebi said the role of ERPs has become important in making investment decisions but their activities are not typically subject to regulatory or supervisory at present. Also, Sebi proposed a regulatory framework on ESG disclosures by listed entities, ESG ratings in the securities market and ESG investing by mutual funds in order to facilitate balance between transparency, simplification and ease of doing business in an evolving domain.

This came in the wake of growing recognition of the significant economic and financial impact of climate change and environmental, social and governance (ESG) risks. In addition, the regulator suggested ESG parameters that could be relevant to Indian context that may be integrated in at least one of the ESG ratings for Indian companies. The regulator mandated the top 1,000 listed companies by market capitalization to make filings as per the Business Responsibility and Sustainability Reporting (BRSR) from FY 2022 -23. In FY 2021-22, more than 175 companies reported on the BRSR framework on a voluntary basis.

"With the BRSR becoming mandatory from this financial year  and a number of stakeholders such as investors and ESG rating providers placing reliance on disclosures made in the BRSR, assurance becomes key for enhancing credibility of disclosure and investor confidence," Sebi had said.