CARE Ratings subsidiary approved by SEBI to provide ESG rating services

In a move that boosts transparency and sustainability practices, the Securities and Exchange Board of India (SEBI) has approved CARE Ratings’ subsidiary, CARE ESG Ratings, to provide environmental, social and governance (ESG) ratings .

These assessments will be a valuable tool for companies looking to improve their sustainability performance. Issuers, or companies that issue securities, can use these ratings to identify areas for improvement and track their progress toward a more sustainable future.

CARE ESG Ratings was given the green light under the SEBI (Credit Rating Agencies) regulations on May 2, 2024. This approval allows them to officially begin offering ESG ratings, according to a statement from 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, companies can assess their position compared to competitors and take steps to strengthen their sustainability policies and practices.”

This decision is in line with the growing importance of ESG factors for investors and stakeholders, both nationally and internationally. Investors are increasingly looking for companies with strong ESG practices, recognizing their potential for long-term growth and reduced risk.

This approval comes soon after SEBI granted similar permission 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 is essentially what ESG ratings provide. These independent assessments help companies identify areas for improvement and track their progress toward sustainability goals.

Benefits for companies:

Independent evaluation: Gain valuable insights into your sustainability performance against industry benchmarks.

Improved decision making: Identify areas that need improvement to strengthen your sustainability policy.

Attract ESG investors: ESG-focused investors are increasingly taking these ratings into account when making investment decisions.

A growing trend:

CARE Ratings joins the growing list of Indian rating agencies offering ESG ratings. Last month, SEBI approved similar services from subsidiaries of ICRA and Crisil. This trend reflects the increasing importance of ESG factors in the current investment landscape.

The future of sustainability:

The ability to measure and track sustainability efforts is critical for companies 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)