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SEBI board approves balanced ESG framework, prescribes glide path for top 150 listed firms from FY24

Sebi,

A balanced framework for ESG (Environmental, Social, and Governance) disclosure, ratings, and investments was approved by SEBI’s board of directors. The regulator informed the board that the BRSR (Business Responsibility and Sustainability Report) core would be introduced to increase the credibility of ESG disclosure. The regulator has established a glide path for the 150 largest listed companies in terms of market share beginning in FY24. By FY27, this path is likely to reach the top 1000 listed companies.

Sebi stated in a statement on Wednesday that the introduction of the BRSR (Business Responsibility and Sustainability Report) core, which consists of a limited set of Key Performance Indicators (KPIs) that listed entities are required to report, will increase the credibility of ESG disclosures. will receive adequate assurance.”

“A glide path has been set for the applicability of the BRSR core, beginning with the top 150 listed entities (by market capitalisation) from FY 2023 – 24, which will be gradually scaled up to FY 2026 – 27,” the statement continued. to include the top 1,000 publicly traded companies.”

Top 150 BSE-listed companies by market cap, with Reliance Industries (RIL) topping the list with a valuation of more than Rs. 15.12 lakh crore, Tata Consultancy Services (TCS) and HDFC Bank, both of which have a market capitalization of more than Rs. 11.48 lakh crore and 8.86 lakh crore by March 29, 2023, respectively. Bharti Airtel, ICICI Bank, HUL, Infosys, HDFC, ITC, and SBI are among the other listed companies in the top 10.

Further, SEBI said, that ESG revelations and confirmations (BRSR center just) will be presented for the worth chain of recorded elements, determining specific edges. From FY 2024 to FY 2025, this will be enforced on a comply-or-interpret basis for the 250 largest listed companies by market cap.

According to SEBI, ERP will provide a separate category of environmental, social, and governance (ESG) rating known as the “Core ESG Rating,” which will be based on the BRSR CORE’s parameters.

ESG rating providers (ERPs) will need to take into account India and emerging market parameters when calculating ESG ratings because emerging markets face distinct environmental and social challenges.

“There shall be no bar on the issuance of other/additional ratings as required by their clients,” however, SEBI stated.

SEBI has mandated that ESG investment schemes invest at least 65% of their AUM in listed companies whose BRSR is guaranteed at the core.

Additionally, it required the board of the AMC to provide third-party assurance and certification regarding the ESG scheme’s compliance with its goals. In addition, the regulator demanded that voting decisions be fully disclosed, with a particular emphasis on environmental, social, and governance factors.

Fund manager commentary and case studies, which, among other things, highlight how the ESG strategy is implemented on the fund or investment, are required to be disclosed by SEBI.

Last but not least, SEBI issued a directive establishing a brand-new scheme category that permits the launch of multiple schemes based on ESG factors.

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