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SEBI Consultation and our comments on ESG Disclosures, Ratings, and Investing Paper

09 June 2023

SEBI takes the lead in promoting ESG practices and encouraging companies to adopt a sustainable approach to business operations.

We share our comments to the Securities and Exchange Board of India (“SEBI”) regarding the Consultation Paper on ESG Disclosures, Ratings and Investing.

As a global financial services provider to over $3 trillion of client assets, including $50 billion of Indian assets globally, we understand the importance of ESG and the role it plays in ensuring the long-term success of the industry as well as the well-being of society and the environment.

We welcome SEBI's initiative to create a framework for ESG Disclosures, Ratings, and Investing for companies. We have provided feedback on the proposed regulatory framework, including ESG Disclosures by listed entities, ESG Ratings in the securities market, and ESG Investing by Mutual Funds. Our aim is to facilitate a balance between transparency, simplification, and ease of doing business in this evolving domain.

Our key recommendations to SEBI on ESG Disclosures, Ratings and Investing are:

  • SEBI provides additional guidance to avoid misconceptions and combat greenwashing by providing clear interpretation of parameters. For instance, parameters such as '% of negative media sentiment' require further clarification on when media sentiment is deemed negative to ensure accurate comparison of companies.
  • SEBI consolidates existing requirements on disclosing political contributions and whistle-blower complaints to reduce regulatory fragmentation.
  • Establishing supply chain transparency is key to creating long-term impactful change. However, SEBI's proposed timeline may pose significant challenges for smaller suppliers. We recommend that SEBI takes a graded approach to disclosure requirements, focusing on suppliers above a certain threshold, such as an annual turnover of Rs 500 crores. This approach will ensure that the top 1000 listed companies are in scope of BSRS from the Financial Year of 2022-2023 while creating awareness down the line.

We thank SEBI for providing this opportunity to share our views on ESG norms and look forward to working together towards a more sustainable and prosperous future for all.

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