The Securities and Exchange Board of India (SEBI) has approved CRISIL ESG Ratings & Analytics Ltd (CRISIL ESG Ratings), a wholly owned subsidiary of CRISIL Ratings Ltd (CRL), as a Category 1 provider of environmental, social and governance (ESG) ratings.

Says Amish Mehta, Managing Director and CEO, CRISIL Ltd, “It is our stated aim to grow sustainably and we are excited to have a licence that reinforces our stewardship of this space. The approval comes at an opportune 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.”

The approval follows SEBI notifications¹ amending the SEBI (Credit Rating Agencies) Regulations, 1999 to include provisions on ESG Rating Providers (ERPs). Pursuant to, and to comply with, these notifications, CRISIL ESG Ratings was incorporated.

CRISIL is the pioneer of credit ratings in India and has steered many innovations in the space over the past 37 years.

CRISIL Ltd 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.

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

The CRISIL ESG ratings framework has been refined over the past few years based on market feedback and alignment with regulatory requirements.

Additionally, our cross-sectoral relative benchmarking of ESG performance helps issuers to showcase their ESG preparedness and performance compared with peers and industry best practices.

CRISIL ESG ratings will also help investors to measure and monitor ESG risks in their portfolio and identify investment opportunities considering long-term sustainability of businesses, in addition to the traditional investment risks.

Like all our businesses, CRISIL will continue to invest strongly in people, processes and policies to maintain the highest standards of governance, transparency, analytical rigour and client servicing in the ESG ratings business, too, furthering our mission to make markets function better.

¹ SEBI/LAD-NRO/GN/2023/136
SEBI/HO/DDHS/POD2/P/CIR/2023/ 121