Regulation 28L - Rating process and monitoring of ESG rating - Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999

1 [ Rating process and monitoring of ESG rating 28L. (1) An ESG rating provider shall: (a) have appropriate internal resources to assign an ESG rating; (b) inform the general public of new ESG rating instruments or symbols introduced by it; (c) ensure that the ESG rating suitably incorporates the environmental, social and governance aspects that are contextual to the Indian market, in such manner as may be specified by the Board from time to time: Provided that nothing contained above shall preclude the ESG rating provider from offering additional ESG rating products or services. (d) promptly disclose the ESG rating assigned to any issuer or security, and any changes in ESG ratings or reviews, after periodic review or otherwise, to the stock exchange(s) where the issuer or the security is listed, and on its website, and issue press releases for the information of the investors; (e) have written policies, procedures and internal controls to ensure that the processes and methodologies are rigorous and systematic, are consistently applied, and are periodically reviewed and updated; (f) adopt and implement written policies and procedures to ensure the issuance of high quality ESG ratings based on publicly available information, and if such information is not available publicly, then rely on other information sources using transparent and defined methodologies; (g) have efficient systems to track material developments related to environmental, social and governance factors to ensure timely and accurate ESG ratings; (h) attempt to continually improve information gathering processes in respect of the issuers and securities rated by it; (i) respond to, and address issues flagged by issuers covered by its ESG rating products while ensuring that the same does not compromise the objectivity of the products; and (j) share the draft ESG rating report with the rated issuer or the issuer whose securities are being rated, before publication of the same: Provided that the ESG rating provider shall grant an opportunity of appeal and representation, if requested for by the issuer. 2 [ Provided further that an ESG rating provider following a subscriber-pays business model shall: (i) share the ESG rating report with its subscribers and the rated entity or the issuer whose securities have been rated at the same time and provide two working days to such rated entity or the issuer to provide its comments; (ii) all comments or clarifications received from the rated entity within the specified timeline shall be included in the addendum to the ESG rating report by the ESG rating provider and if the rated entity or the issuer has a different viewpoint on the data or assumptions stated in the ESG rating report, the ESG rating provider, after taking into account the said viewpoint, shall either revise the ESG rating report or issue an addendum to the ESG rating report with its remarks, for circulation to all its subscribers, as considered appropriate by the ESG rating provider; (iii) disclose the policy regarding sharing of ESG rating report with the rated entity or the issuer whose securities have been rated and the subscribers on its website; and (iv) provide a facility to the rated entity or the issuer whose securities have been rated to seek any clarification, including the ESG rating methodology or assumptions. ] (2) The ESG rating provider shall continuously monitor the rating of a client, unless the rating is withdrawn in such manner as may be specified by the Board. ] ************** NOTES:- 1. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/136 dated 03-07-2023 2. Inserted vide Notification No. SEBI/LAD-NRO/GN/2025/242 dated 22-04-2025