SEBI (Securities and Exchange Board of India), the capital markets regulator in India, has formed an advisory council to guide ESG (environment, social, and governance) matters in the securities market. The Securities and Exchange Board of India (Sebi) said that Navneet Munot of HDFC Mutual Fund would be in charge of the committee.

Besides Munot, the other members of the panel, including R Mukundan, MD and CEO of Tata Chemicals; C Siva Kumar, executive director of NTPC, Amit Talgeri, chief risk officer at Axis Bank, Sharad Kalghtagi, ESG head Cipla; Amit Tandon founder and MD Institutional Investor Advisory Services; J N Gupta, founder and MD of Stakeholders Empowerment Services and Rama Patel, Director of Crisil Ratings.

The group will have 19 members, with four Sebi professionals serving as the body's secretariat and coordinator. The committee's mandate includes improving company responsibility and sustainability reports, ESG ratings, and ESG investing.

In terms of improving the Business Responsibility and Sustainability Report (BRSR), Sebi stated that the panel would be in charge of assessing leadership indicators that may be made mandatory, such as those relating to the value chain and producing sector-specific sustainability disclosures.

It will also examine evolving disclosures and metrics relevant to the Indian environment, identifying areas for assurance and a path for implementation. In addition, the committee will look into adopting a different or parallel approach for ESG grading that is tailored to emerge markets, such as a focus on the letter "S" and job creation.

That will also entail producing uniform 'G' indicators as input to ESG ratings and or credit rating disclosures in ESG rating providers' rationale on what and how qualitative variables were factored in the ESG ratings or observations.

Sebi said the committee would monitor continual refinement of disclosures on ESG Schemes of mutual funds, with an emphasis on mitigating risks of misselling and greenwashing.

"The evolution of ESG standards and norms is a dynamic process that requires ongoing evaluation," Sebi explained.

It will also look into whether ESG funds require prudential standards and whether there is a long-term plan to mandate ESG disclosures for all mutual fund schemes.

Source: Financial Express