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MUMBAI : The Securities and Exchange Board of India has formed an advisory committee for advising on Environmental Social and Governance (ESG) related matters pertaining to the securities markets.

The committee will be chaired by Navneet Munot, the chief executive officer of HDFC Asset Management Company, the regulator said in a statement.

Besides, the committee comprises industry experts like R. Mukundan , MD & CEO of Tata Chemicals, C Siva Kumar, executive director of NTPC, Amit Talgeri, chief risk officer, Axis Bank, Sharad Kalghtagi, ESG head Cipla, Amit Tandon, Institutional Investor Advisory Services, J N Gupta, founder & MD of Stakeholders Empowerment Services, Rama Patel, Director Crisil Ratings and Ramnath.

Essentially, the terms of reference of the committee will include enhancements in business responsibility and sustainability report, ESG ratings and ESG investing.

In terms of the Business Responsibility and Sustainability report the committee will look at reviewing leadership indicators that may be made essential - including those related to value chain along with developing sector specific sustainability disclosures.

Additionally, it will also examine evolving disclosures / metrics relevant to the Indian context, as well as suggesting areas for assurance and a plan for implementation.

Furthermore, the committee will oversee the development of a second or parallel approach for ESG ratings tailored to emerging markets, such as a focus on ‘S’ including job creation, and so on.

This will also include developing uniform indicators of ‘G’ as input to ESG ratings and / or credit ratings. While the disclosures in the rationale by ESG rating providers on what and how qualitative factors were factored in the ESG ratings / observations will also be looked at.

In the case of ESG investing, the advisory committee will assess the ongoing improvement of disclosures relevant to ESG Mutual Fund Schemes, with a special focus on risk mitigation of mis-selling and greenwashing hazards.

The regulator stated that the evolution of ESG standards and regulations is a dynamic process that requires continual evaluation.

The committee will also examine whether ESG funds should have any particular prudential norms. While also evaluating the long term plan to prescribe ESG disclosures for all mutual fund schemes, Sebi said.

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