The Securities and Exchange Board of India (SEBI) has constituted a working group to review the regulatory framework governing ESG Rating Providers (ERPs), aiming to enhance transparency and bolster investor confidence in sustainability metrics.

The move by India’s capital markets regulator responds to sustained feedback from market participants and stakeholders on gaps in the current ESG ratings regime and its implications for sustainable investment decisions. Under the initiative, SEBI has formed a dedicated working group comprising issuers, investors, ESG rating users, domestic and global rating providers, ESG analysts, legal experts, and academic representatives to undertake a comprehensive review of the framework governing Environmental, Social, and Governance (ESG) Rating Providers (ERPs).

The panel will undertake a detailed assessment of the existing regulatory architecture, evaluate stakeholder suggestions and industry representations, and recommend measures aimed at enhancing the transparency, reliability, and credibility of ESG ratings used across Indian financial markets. It is also tasked with evaluating international developments in ESG rating regulations and identifying areas for alignment with global best practices, while accounting for the specific needs of the Indian market and the BRSR framework.

SEBI’s initiative reflects the growing importance of standardised, high-quality ESG data for the expanding sustainable finance ecosystem, where investor confidence and robust oversight are essential for capital allocation decisions tied to environmental and social objectives.