Crisil ESG Ratings receives market regulator Sebi approval for ESG scoring

Crisil ESG Ratings & Analytics on Thursday received approval from the Securities and Exchange Board of India (Sebi) as a Category 1 provider of environmental, social, and governance (ESG) ratings.

After the overhaul of the norms for ESG rating providers (ERPs) by the market regulator last year, ESG scoring businesses required registration and certification. Crisil ESG Ratings, a unit of Crisil, was incorporated to comply with the same mandate.

The rating provider launched its ESG scoring business in 2021 and now tracks over 1,000 companies across 65 sectors. The company said that this business will now be transferred to the subsidiary Crisil ESG Ratings.

ESG scores are indicators of whether a company is sustainable and follows ethics. These scores are used by asset managers and investors to align and choose companies as per their standards of ESG.

The markets regulator had introduced two categories for the rating entities depending on their net worth and functions, while the regulation was aimed to ensure that the methodologies are transparent, practical, accurate, and in line with the Indian ecosystem.

Norms for ERPs followed the introduction of a comprehensive and assurance-driven Business Responsibility and Sustainability Report (BRSR) Core for the listed companies and the value-supply chain to keep a check on greenwashing.