SEBI tweaks framework for ESG Rating Providers using subscriber-pays model

Sebi has modified the rules governing credit rating agencies in an attempt to improve clarity and transparency | Photo credit: Hemanshi Kamani

The Markets Sebi regulator has adjusted the framework for ESG (ERP) qualification suppliers, especially for those who use a subscriber payment model, which requires them to share ESG (environmental, social and governance) qualification reports of simscribor reports.

This policy must be disclosed publicly.

To give this effect, the Bag Board and Exchange of India (Sebi) has modified the rules that govern credit rating agencies in an attempt to improve clarity and transparency.

“A ESG qualification provider after a subscriber payment business model must have the ESG qualification report with its subscribers and the qualified entity or issuer whose values have been qualified at the same time and will provide two business days” “” their notification issued on Tuesday.

In addition, all comments or clarifications received from the nominal entity within the specific timeline will be included in the annex to the ESG qualification report by the ERP.

If the nominal entity or the issuer has a different point of view in the data established in the report, the ERP, after taking into account said point of view, can review the report or issue an annex to the report with your comments, for the circulation to all its subsormen.

Moreoover, ERP must reveal the policy regarding the exchange of ESG qualification reports with the qualified entity or the issuer whose values have been qualified and subscribers on their website.

ERP will also provide an ease to the nominal entity or the issuer whose values have described to seek any clarification, including the methodology or assumptions of ESG rating.

Sebi has defined the subscriber payment business model as a business model where the ESG qualification provider obtains its income from the SG of subscribers, including banks, insurance companies, pension funds or the qualified entity itself.

A ESG qualification provider after a subscriber payment business model will have to ensure that the assigned qualification is based only on Avia’s public information and that the payment of rates for the subscriber is the payment of lower fees among all subscriber subscribers.

“Only the group or associated companies of an entity, whose main business requires the ESG qualifications of said entity or values issued by said entity, and are regulated by the regulator (s) of the financial sector (s). Sebi said.

However, there should be no conflict of interest or any potential or abuse or real use, he added.

ERPS will have to declare on its website the regulator or authority of the financial sector under whose scope makes ESG ratings for each product and will have to comply with the applicable laws administered by said regulator or authority of the financial sector.