SEBI has constituted a committee for advising on Environmental, Social, and Corporate Governance (ESG) -related matters in the securities market as ESG Advisory Committee as on May 06 2022.
ESG Advisory Committee
The committee was formed under the chair of Mr Navneet Munot with other respected industry leaders as members and divided into 5 groups.
Group 1 - Prepare of sustainability reports - 7 member
Group 2 - Users of sustainability reports (Mutual Funds, Asset Managers, Insurance Companies) - 4 member
Group 3 - ESG Rating Providers, Proxy Advisors, Credit Rating Agencies - 4 Member
Group 4 - Others – Technical Expert, Assurance Providers - 3 member
Group 5 - Secretariat to the Committee & Co-ordinator - 4 member
Purpose
The committee has to make recommendations to streamline the regulatory framework for the following three parts:
A. ESG Disclosure - 4 objective
B. ESG Ratings - 3 objective
C. ESG Investing - 3 objective
A. ESG Disclosure - 4 objective
Review of leadership indicators that may be made essential - including those related to value chain
Developing sector specific sustainability disclosures
Evolving disclosures / metrics that are relevant to the Indian context.
Identify areas for assurance and also roadmap for its implementation
B. ESG Ratings - 3 objective
Developing separate/ parallel approach for ESG rating adapted to emerging market e.g. focus on ‘S’ including employment generation, etc.
Developing uniform indicators of ‘G’ as input to ESG ratings and / or credit ratings
Disclosures in the rationale by ESG rating providers on what and how qualitative factors were factored in the ESG ratings / observations
C. ESG Investing - 3 objective
Continuous enhancement of disclosures specific to ESG Schemes of Mutual Funds with particular focus on mitigation of risks of mis-selling and greenwashing. The evolution of standards and norms for ESG is a dynamic process which necessitates continuous evaluation.
Examine whether ESG funds need to have prudential norms, if any.
Long term plan to prescribe ESG disclosures for all Mutual Fund schemes.
Member of Committee
