In a move that boosts transparency and sustainability practices, the Securities and Exchange Board of India (SEBI) has granted approval to CARE Ratings’ subsidiary, CARE ESG Ratings, to provide environmental, social, and governance (ESG) ratings.
These ratings will be a valuable tool for businesses looking to improve their sustainability performance. Issuers, or companies issuing securities, can leverage these ratings to identify areas for improvement and track their progress towards a more sustainable future.
CARE ESG Ratings received the green light on May 2nd, 2024, under the SEBI (Credit Rating Agencies) Regulations. This approval allows them to officially begin offering ESG assessments, according to a statement released by CareEdge Group.
“ESG ratings provide an independent perspective on a company’s sustainability journey,” said Mehul Pandya, MD and Group CEO of CareEdge. “With this information, businesses can assess their standing compared to competitors and take steps to strengthen their sustainability policies and practices.”
This decision aligns with the growing importance of ESG factors for investors and stakeholders both domestically and internationally. Investors are increasingly seeking out companies with strong ESG practices, recognizing their potential for long-term growth and reduced risk.
This approval comes shortly after SEBI granted similar permissions to subsidiaries of ICRA and Crisil to offer ESG ratings. These developments indicate a growing focus on ESG practices within the Indian financial market, creating a more transparent and sustainable business environment.
What are ESG Ratings?
Imagine a scorecard for a company’s impact on the environment, its social responsibility, and its governance practices. That’s essentially what ESG ratings provide. These independent assessments help businesses identify areas for improvement and track their progress on sustainability goals.
Benefits for Businesses:
Independent evaluation: Gain valuable insights into your sustainability performance compared to industry benchmarks.
Enhanced decision-making: Identify areas needing improvement to strengthen your sustainability policies.
Attract ESG investors: ESG-focused investors increasingly consider these ratings when making investment decisions.
A Growing Trend:
CARE Ratings joins the growing list of Indian credit rating agencies offering ESG assessments. Last month, SEBI approved similar services from subsidiaries of ICRA and Crisil. This trend reflects the rising importance of ESG factors in today’s investment landscape.
The Future of Sustainability:
The ability to measure and track sustainability efforts is crucial for businesses striving for long-term success. With SEBI’s approval, CARE ESG Ratings is well-positioned to play a key role in India’s journey towards a more sustainable future.
(Source: CareEdge Group)
