CRISIL’s Subsidiary Received Approval From SEBI to Provide ESG Ratings

On April 25, 2024, CRISIL ESG Ratings & Analytics Ltd (CRISIL ESG Ratings), a wholly owned subsidiary of CRISIL Ratings Ltd (CRL), received approval from the market regulator Securities and Exchange Board of India (SEBI) to act as a Category 1 provider of environmental, social and governance (ESG) ratings.

The approval comes after SEBI notifications that included clauses about ESG Rating Providers (ERPs) to the SEBI (Credit Rating Agencies) Regulations, 1999. In accordance with and in response to these notices, CRISIL ESG Ratings was included.

Over the past few years, the CRISIL ESG rating system has been improved in response to market input and regulatory compliance. Furthermore, issuers are able to demonstrate their ESG performance and readiness in comparison to industry best practices and peers by means of its cross-sectoral comparable benchmarking.

In addition to standard investment risks, CRISIL ESG ratings will assist investors in measuring and tracking ESG risks in their portfolios and identifying investment possibilities that consider long-term company sustainability.

To promote its objective of improving market functioning, CRISIL, like all of its companies, will keep making significant investments in people, procedures, and policies in order to uphold the best levels of governance, transparency, analytical rigour, and client service in the ESG rating industry.

“It is our stated aim to grow sustainably, and we are excited to have a licence that reinforces our stewardship of this space. The approval comes at an opportune time when ESG disclosures have been improving, and there is increasing realisation in the financial markets on the need for independent ESG ratings that will support decision-making for issuers and investors and channel funds towards sustainable growth of the Indian economy,” said Amish Mehta, Managing Director and CEO, CRISIL Ltd.

“The ESG scores, which will henceforth be called ‘ESG ratings’, have already found traction among market participants. These are based on a unique India specific framework that factors in nuances at the sectoral level while being guided by global best practices. The process includes analysis of more than 500 unique data points across the environmental, social and governance aspects for each company,” said Gurpreet Chhatwal, Managing Director of CRISIL Ratings.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.