Crisil’s ESG ratings unit gets SEBI’s nod

The Securities and Exchange Board of India has approved CRISIL ESG Ratings & Analytics Ltd (CRISIL ESG Ratings) as a provider of environmental, social and governance (ESG) ratings.

Amish Mehta, Managing Director and CEO, CRISIL Ltd, said, “The approval comes at a 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.”

Last July, SEBI had said that

ESG rating services can only be provided by entities that have been certified. Even foreign agencies that provide ESG rating services will have to get SEBI certification if they want to provide services to entities located in India. Prior to this order, Crisil was providing ESG ratings as part of its overall rating services. CRISIL ESG Ratings was incorporated to comply with SEBI’s order.

Crisil also launched its ESG ‘scoring’ business in 2021 and gradually expanded coverage from 225 to ~1,000 companies across ~65 sectors. This business will now be transferred to CRISIL ESG Ratings.

Gurpreet Chhatwal, Managing Director, CRISIL Ratings, said, “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.”