In a recent development, the Securities and Exchange Board of India (SEBI) has granted approval to CRISIL ESG Ratings & Analytics Ltd (CRISIL ESG Ratings), a wholly owned subsidiary of CRISIL Ratings Ltd (CRL), as a Category 1 provider of environmental, social, and governance (ESG) ratings.
Amish Mehta, Managing Director and CEO of CRISIL Ltd, expressed enthusiasm about the approval, stating, “It is our stated aim to grow sustainably, and we are excited to have a license that reinforces our stewardship of this space.” Mehta noted the increasing importance of ESG disclosures in financial markets and highlighted the role of independent ESG ratings in supporting decision-making for issuers and investors.
The approval from SEBI follows recent notifications amending the SEBI (Credit Rating Agencies) Regulations, 1999, incorporating provisions on ESG Rating Providers (ERPs). In compliance with these notifications, CRISIL ESG Ratings was incorporated.
CRISIL, known as the pioneer of credit ratings in India, has launched its ESG ‘scoring’ business in 2021, which has gradually expanded coverage from 225 to approximately 1,000 companies across 65 sectors. This business will now be transferred to CRISIL ESG Ratings.
Gurpreet Chhatwal, Managing Director of CRISIL Ratings, highlighted the traction gained by the ESG scores among market participants. Chhatwal emphasized that the ESG ratings are based on a unique India-specific framework, considering nuances at the sectoral level and guided by global best practices. The process involves analyzing over 500 unique data points across environmental, social, and governance aspects for each company.
CRISIL ESG ratings framework has been refined over the past few years based on market feedback and alignment with regulatory requirements. Additionally, cross-sectoral relative benchmarking of ESG performance aids issuers in showcasing their ESG preparedness and performance compared to peers and industry best practices.
The CRISIL ESG ratings aim to assist investors in measuring and monitoring ESG risks in their portfolio, identifying investment opportunities, and considering the long-term sustainability of businesses alongside traditional investment risks.
CRISIL commits to investing strongly in people, processes, and policies to maintain the highest standards of governance, transparency, analytical rigor, and client servicing in the ESG ratings business, aligning with its mission to improve market functionality.
