CRISIL's Subsidiary Receives SEBI License for ESG Rating Business in India

CRISIL ESG Ratings, a CRISIL subsidiary, receives SEBI license to provide ESG ratings in India, supporting the growing demand for sustainable investing.

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Dil Bar Irshad
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CRISIL's Subsidiary Receives SEBI License for ESG Rating Business in India

CRISIL's Subsidiary Receives SEBI License for ESG Rating Business in India

CRISIL ESG Ratings and Analytics Limited, a subsidiary of CRISIL, has received a license from the Securities and Exchange Board of India (SEBI) to commence its business as an Environment, Social, and Governance (ESG) rating provider in India. The announcement was made by CRISIL on April 25, 2024, in a press release and regulatory filings.

The license will allow CRISIL ESG Ratings to initiate its ESG rating services in the country, providing assessments and analysis on the ESG performance of companies. This development is part of CRISIL's strategy to expand its offerings in the growing ESG space and cater to the increasing demand for ESG-related data and insights from investors and other stakeholders.

CRISIL ESG Ratings was incorporated after SEBI amended the regulations to incorporate provisions on ESG Rating Providers (ERPs) last year. The rating provider launched its ESG scoring business in 2021 and now tracks over 1,000 companies across 65 sectors.

The approval comes at a time when ESG disclosures have been improving, and there is an increasing realization in the financial markets on the need for unbiased ESG ratings to support decision-making for issuers and investors. SEBI has established two rating entity categories based on their financial status and roles, and the accredited rating agency is required to publish its evaluation methodology on its official website, balancing transparency and the protection of proprietary or confidential information.

Why this matters: The growing focus on ESG factors in investment decisions and corporate strategies has led to a surge in demand for reliable and standardized ESG ratings. CRISIL's entry into the ESG rating business in India is expected to enhance transparency and support the sustainable growth of the Indian economy.

Prior to this, CRISIL was providing ESG ratings as part of its overall rating services, but CRISIL ESG Ratings was incorporated to comply with SEBI's order that ESG rating services can only be provided by certified entities. The ESG ratings are based on a unique India-specific framework that factors in nuances at the sectoral level, while being guided by global best practices, and include analysis of more than 500 unique data points across the environmental, social, and governance aspects for each company.

"The license will allow CRISIL ESG Ratings to initiate its ESG rating services in the country, providing assessments and analysis on the ESG performance of companies," CRISIL stated in its announcement. The move is expected to support the growing demand for ESG-related information and assessments as investors and companies increasingly focus on sustainability and responsible investing in India.

Key Takeaways

  • CRISIL ESG Ratings received SEBI license to provide ESG ratings in India.
  • CRISIL ESG Ratings will assess and analyze the ESG performance of companies.
  • CRISIL ESG Ratings was incorporated after SEBI's regulations on ESG Rating Providers.
  • SEBI has established two rating entity categories based on financial status and roles.
  • CRISIL's entry expected to enhance transparency and support sustainable growth in India.