ESG Champions of India 2024

ESG Champions of India 2024 | 9 [ ESG AND ITS RELEVANCE IN THE CURRENT SCENARIO ] INDIAN ESG ECOSYSTEM The ESG Landscape in India is complex and multifaceted confronted with an array of challenges including environmental and social concerns, regulatory and governance issues and investment related challenges. Addressing these issues is critical for the health and well- being of the population, and for preserving natural resources for future generations. While the government of India has taken proactive measures to address the environmental and social issues, including implementation of stricter emission norms, investing in renewable energy resources, implementation of welfare schemes and poverty alleviation projects such as Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) and the Pradhan Mantri Jan Dhan Yojana (PMJDY), there needs to be a lot more done in this space. In terms of governance, checks and balances for prevention, detection and action on acts of corruption and other forms of power abuse is crucial to ensure sustainable and equitable growth. On the investment side, with increased awareness of the benefits of ESG, many companies are adopting these strategies into their corporate agenda. However, transparent and reliable disclosures of ESG parameters is a must for attracting investments. Given the variance in parameters used by different ESG rating providers (ERPs) which resulted in a disparity in the ranking of companies, the Securities and Exchange Board of India (SEBI) issued a Master Circular in June 2023 to lay down the procedure to be followed by ERPs with a view to bring uniformity in the rating process and reporting. Some key highlights of the circular are as follows - • ESG Rating Services can be provided only by entities certified by SEBI. • Foreign agencies that provide ESG Rating services are required to obtain SEBI certification for providing rating services to entities located in India. • Credit Rating Agencies that provide ESG ratings through their agency or subsidiary are mandated to display prominently on their website and ESG rating reports that ESG ratings are different from Credit Ratings. • ERPs are required to follow a sector-agnostic approach and adhere to a Rating Scale of 1-100, where 100 represents the maximum score. • ERPs shall follow any of the mutually exclusive business models, namely a) Subscriber-paid or b) Issuer- paid. • ERPs shall offer at least six rating products – ESG Rating, Transition or Parivartan Dun & Bradstreet