SEBI examines the disclosure of environmental, social and governance (ESG) aspects in the rating press release by rating agencies.
The market regulator is also in the process of providing specific information on ESG UCITS.
“The introduction of the Corporate Responsibility and Sustainability Report (BRSR) and the launch of ESG mutual fund programs have sparked interest in ESG ratings as a means of ESG disclosure by issuers listed in stock market to help investors to meaningfully integrate ESG into their investment decisions. In this context, SEBI is examining the disclosure of aspects related to ESG in the press release of credit rating agencies, ”said Ajay Tyagi, President of SEBI, at the inauguration of the research and innovation center Arun Duggal ESG, IIM Ahmedabad.
In recent years, growing investor demand for companies to demonstrate high ethical and moral standards has forced private money managers to identify ESG-compliant startups to form a significant portion of their portfolio. As a result, ESG ratings have become just as important for unlisted companies.
From an investment perspective, ESG funds are growing rapidly in the Indian mutual fund industry. Asset management companies (AMCs) have launched action programs in the ESG space under the thematic category.
AMCs are also launching exchange-traded funds (ETFs) and ETF funds of funds in the ESG space. As of October 31, 2021, there were 11 ESG-themed mutual fund schemes in India with assets under management of over Rs 13,000 crore, Tyagi said.
These schemas have information in their schema briefing documents in line with other schema categories, such as investment objective, asset allocation, investment strategy, investment restrictions , etc. and subsequent information.
“However, these disclosures often do not clearly bring out all aspects of ESG investing, including investment strategy, use of proprietary / third party ratings in investment decision making, investment monitoring ESG etc. SEBI is in the process of stipulating specific disclosures for ESG programs, ”Tyagi said.