The Securities and Exchange Board of India (SEBI) has issued a master circular for ESG Rating Providers (ERPs), consolidating and updating the operational, governance and disclosure requirements that apply to ERPs under the SEBI (Credit Rating Agencies) Regulations, 1999 as amended to cover ESG ratings. The directions take effect immediately and supersede SEBI’s earlier ERP circulars, while preserving actions, liabilities and proceedings under the rescinded instructions. The circular standardises key elements of ERP activity, including mandatory ESG rating products and processes. ERPs must offer at least six products (including an ESG Rating, Transition or Parivartan Score and Combined Score, plus “Core” variants based on third-party assured or audited data once “BRSR Core” is available) and provide ESG ratings on a 0–100 scale. SEBI also restricts ERPs to a single revenue model (subscriber-pays or issuer-pays), sets review timelines for material developments (within 10 days, and within 45 days for reviews triggered by publication of a Business Responsibility and Sustainability Report), and prescribes transparency and conduct measures such as minimum disclosures in rating rationales (including a dedicated “Rating Sensitivities” section), non-cooperation labelling, and issuer-pays contractual requirements including a seven-day deadline for issuers to provide information requested for ratings. Further provisions cover governance and oversight, including independent director thresholds, board committees and a Chief Ratings Officer reporting line to the board’s ESG Ratings Sub-Committee, with some committee and internal audit requirements for Category II ERPs deferred until 29 April 2027. ERPs are required to make extensive annual and continuous disclosures (including rating action summaries, rating histories, three-year weighted average one-year transition matrices, and revenue concentration disclosures), provide disclosures in machine-readable formats with a 10-year archive, and support stock exchange display of ESG ratings and related press releases in a standard format. Compliance is monitored through yearly internal audits, and the circular also sets procedures for change in control, business transfers, and orderly migration arrangements on suspension, cancellation or surrender of registration.
Securities & Exchange Board of India 2025-07-11
Securities and Exchange Board of India issues master circular for ESG Rating Providers and mandates a 0–100 ESG scoring scale
SEBI has issued a master circular for ESG Rating Providers (ERPs), updating operational, governance, and disclosure requirements under the SEBI (Credit Rating Agencies) Regulations, 1999. The circular mandates standardized ESG rating products, restricts ERPs to a single revenue model, and sets transparency and conduct measures. It outlines governance provisions, extensive disclosure requirements, and compliance monitoring through annual audits.