**Summary:**
SEBI Circular SEBI/HOD/DDHS/DDHS/PoD3/CIR/2025/007, issued on January 17, 2025, modifies the timeline for ESG Rating Providers (ERPs) to review ESG ratings following the occurrence of material events, specifically the publication of Business Responsibility and Sustainability Reports (BRSR).
The circular amends Para 10.1.3 of the Master Circular SEBI/HOD/DDHS/DDHS/PoD3/CIR/2024/45 dated May 16, 2024. While ERPs are still required to review ESG ratings immediately, and no later than 10 days after the occurrence or announcement of news regarding material developments impacting a rated company's ESG profile, a relaxation is provided for reviews triggered by the publication of BRSR. The review of ESG ratings following the publication of a BRSR by the rated entity must be carried out immediately, but no later than 45 days after the BRSR publication.
This change is implemented to address operational challenges faced by ERPs in reviewing a large number of listed companies following BRSR publications and aims to promote ease of doing business.
The circular is effective immediately and issued under the authority granted by Section 11(1) of the Securities and Exchange Board of India Act, 1992, and Regulation 28H of the CRA Regulations.
The circular is available on the SEBI website (www.sebi.gov.in) under the "Legal" category and "Circulars" dropdown.
For further information, contact Sarika Kataria, Deputy General Manager, Department of Debt and Hybrid Securities, at Tel No. 022-26449411 or via email at sarikak@sebi.gov.in.
Key Entities Referenced
ESG Rating Providers: Entities registered to provide Environmental, Social, and Governance (ESG) ratings.
Securities and Exchange Board of India (SEBI): The regulatory body for the securities market in India.
Master Circular for ESG Rating Providers ERPs SEBIHODDHSDDHSPOD3PCIR202445: A circular issued by SEBI containing guidelines and regulations for ESG Rating Providers.
Business Responsibility and Sustainability Reporting (BRSR): A reporting framework for listed companies to disclose their performance on environmental, social, and governance parameters.
CRA Regulations: Regulations related to Credit Rating Agencies, relevant to ESG rating activities.
Securities and Exchange Board of India Act, 1992: The law that established SEBI and defines its powers and functions.
Sarika Kataria: Deputy General Manager at the Department of Debt and Hybrid Securities, SEBI.
Department of Debt and Hybrid Securities: A department within SEBI.
CIRCULAR
SEBI/HO/DDHS/DDHS-PoD-3/P/CIR/2025/007 January 17, 2025
To,
All Registered ESG Rating Providers,
All Listed Entities,
All Recognized Stock Exchanges,
All Registered Depositories
Madam/ Sir,
Sub: Timeline for Review of ESG Rating pursuant to occurrence of ‘Material
Events’
1. Para 10.1 of the Master Circular for ESG Rating Providers (ERPs)
SEBI/HO/DDHS/DDHS-POD3/P/CIR/2024/45 dated May 16, 2024 (“Master
Circular”) provides the following in respect of material events requiring a review of
the ESG ratings:
“10.1.1. Regulation 28L(g) of CRA Regulations require an ERP to have
efficient systems to track material developments related to environmental,
social and governance factors to ensure timely and accurate ESG ratings.
10.1.2. Material developments in this respect shall be any event that
results in a change of the ESG profile of the rated company. Such
material developments shall include, but not be restricted to, publication of
Business Responsibility and Sustainability Reporting (BRSR) or controversy/
penalty in environmental, social or governance areas.
10.1.3. ERPs shall carry out a review of the ESG ratings upon the occurrence
of or announcement/ news of such material developments, and immediately,
but not later than 10 days of occurrence of the said event.”
Page 1 of 22. ERPs have made a representation to SEBI, highlighting the operational challenges
faced in undertaking review of ESG ratings for a large pool of listed companies
pursuant to publication of BRSR by such companies, within the specified timeline
of 10 days. Considering the same, in order to promote Ease of Doing Business, it
has been decided to provide relaxation in the timeline for review of ESG rating
pursuant to publication of BRSR. Accordingly, Para 10.1.3. of the Master Circular
stands modified as below:
“ERPs shall carry out a review of the ESG ratings upon the occurrence of or
announcement/ news of such material developments immediately, but not later
than 10 days of occurrence of the said event. However, review of the ESG rating
pursuant to publication of BRSR by the rated entity shall be carried out
immediately, but not later than 45 days of the publication of the BRSR.”
3. The circular shall be applicable with immediate effect.
4. This circular is issued with the approval of competent authority, in exercise of the
powers conferred by Section 11 (1) of Securities and Exchange Board of India
Act, 1992 read with the provisions of Regulation 28H of CRA Regulations to
protect the interest of investors in securities and to promote the development of,
and to regulate, the securities market.
5. This Circular is available on the website of the Securities and Exchange Board of
India at www.sebi.gov.in under the category “Legal” and under the drop down
“Circulars”.
Yours faithfully,
Sarika Kataria
Deputy General Manager
Department of Debt and Hybrid Securities
Tel No.022-2644-9411
Email ID - sarikak@sebi.gov.in
Page 2 of 2