The Securities and Exchange Board of India (SEBI) has released a Master Circular specifically aimed at Environmental, Social, and Governance (ESG) Rating Providers (ERPs). This circular, announced on July 12, 2023, consolidates existing guidelines and regulations under the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999 (CRA...
The Securities and Exchange Board of India (SEBI) has released a Master Circular specifically aimed at Environmental, Social, and Governance (ESG) Rating Providers (ERPs). This circular, announced on July 12, 2023, consolidates existing guidelines and regulations under the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999 (CRA Regulations)
The Master Circular serves as a single reference point for all procedural and disclosure requirements applicable to ERPs. By amalgamating various directives and guidelines into one document, SEBI aims to simplify the regulatory landscape for industry participants and other stakeholders.
ERPs are mandated to adhere to the conditions laid out in the Master Circular. To facilitate effective implementation, ERPs must have the necessary systems and infrastructure in place. The Board of Directors of each ERP holds the responsibility for ensuring compliance with these provisions, emphasizing the importance of governance in the regulatory framework.
A significant aspect of the Master Circular is the introduction of stringent monitoring mechanisms. ERPs are required to undergo a yearly internal audit to ensure adherence to the provisions. This audit is mandated under Regulation 28S of the CRA Regulations and reinforced by the Master Circular.