SEBI issues norms for withdrawing an ESG rating
SEBI issued norms for withdrawing an ESG rating, weeks after its chief told media it is reviewing the reporting requirements on environment for listed companies. As per SEBI circular, the ESG ratings providers can withdraw rating on a listed company if business responsibility and sustainability report are not available for a firm or if there are no subscribers for the ratings. Additionally, when rating a security, the ratings provider can withdraw ratings if it has rated the firm for three years or for 50% of the security's tenure. Earlier this month, SEBI’ new chief Tuhin Kanta Pandey told media that SEBI will review the ESG disclosures, following concerns raised by Indian industry on reporting requirements on the environment, labor and other issues that it believes are onerous.
This comes at a time when similar moves are being made in different parts of the world. The European Commission has proposed rules to exempt thousands of smaller European businesses from EU sustainability reporting rules, while U.S. President has pushed back against ESG requirements. India has fared poorly on ESG scores, with Moody's Ratings classifying the country in the high risk category on environment and social factors.
