Capital markets regulator Sebi has established an advisory committee to advise on ESG-related matters (environment, social and governance) in the securities market.
The committee will be led by HDFC Mutual Fund Navneet Munot, the Securities and Exchange Board of India (Sebi) said in a statement.
In addition to Munot, the committee has experts 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; JN Gupta, Founder and Director of Stakeholders Empowerment Services and Rama Patel, Director of Crisil Ratings.
In total, the committee has 19 members and four SEBI officials will serve as the committee’s secretariat and coordinator.
The committee’s terms of reference include improvements in corporate responsibility and sustainability reporting, ESG ratings and ESG investments.
Regarding improvements to the Business Responsibility and Sustainability Report (BRSR), Sebi said the panel will be responsible for assessing leadership indicators that can be made essential – including those related to the value chain and developing sector-specific information on sustainability.
It will also review evolving disclosures/statistics relevant to the Indian context and identify areas for assurance and a roadmap for their implementation.
In addition, the committee will explore the development of a separate or parallel approach to ESG ratings adapted to emerging markets, such as focus on ‘S’, including job generation.
This also includes developing uniform indicators of ‘G’ as input to ESG ratings and/or disclosure of credit ratings in the substantiation by ESG rating providers about what and how qualitative factors have been factored into the ESG ratings or observations.
With regard to ESG investing, Sebi said the committee will oversee the continued improvement of disclosures specific to mutual fund ESG schemes, with a particular focus on mitigating the risks of misselling and greenwashing.
“The evolution of standards and norms for ESG is a dynamic process that requires continuous evaluation,” said Sebi.
It will also examine whether ESG funds should have prudential standards, if any, as well as a long-term plan to prescribe ESG disclosures for all mutual funds.