What’s in a name: SEBI standing guard against ESG greenwashing

A version of this article appeared in BQ Prime. You may read it here.

By Upasana Rao (Partner), Megha Neelakshi Katheria (Analyst).

India’s securities regulator SEBI has, in its board meeting on March 29, 2023, approved much awaited regulations for ESG related disclosures, certifications and labelling to facilitate more transparency and promote sustainability linked investing. Currently there are not more than 15 ESG funds in the Indian market, far lower than the global markets. Despite growing interest in sustainable themed investing, investors do not fully comprehend what ESG funds offer in the absence of adequate disclosures and are wary of greenwashing. The new measures by SEBI aim to improve monitoring of ESG performance and will boost investor confidence and lead to more ESG investing over time.

The amended regulations will gradually increase the obligations of top 1000 listed companies beyond submitting an annual Business Responsibility and Sustainability Report (BRSR), as they will be required to submit mandatory assurance-based disclosures on key performance indicators under specified E, S and G attributes, referred to as the ‘BRSR Core’ in a phased manner. A regulatory framework has been introduced for ESG rating providers who will be required to apply a minimum set of defined ESG parameters based on the BRSR Core indicators that are assured by third party review. Mutual fund regulations have also been amended to introduce criteria and expand disclosure norms for ESG labelled schemes with focus on mitigating risks of mis-selling and greenwashing.

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