Mumbai Securities and Exchange Board of India has constituted an advisory committee to advise on environmental, social and governance (ESG) related matters relating to securities markets.
The committee will be headed by Navneet Munot, CEO, HDFC Asset Management Company, the regulator said in a statement.
In addition, the committee includes Tata Chemicals MD and CEO R. Mukundan, NTPC Executive Director C Shiva Kumar, Axis Bank Chief Risk Officer Amit Talgeri, Cipla’s ESG Head, Amit Tandon, institutional investors and industry experts. Advisory Services, JN Gupta, Founder and MD, Stakeholders Empowerment Services, Rama Patel, Director Crisil Ratings and Ramnath.
Essentially, the Committee’s terms of reference will include the Business Responsibility and Sustainability Report, ESG Ratings and an increase in ESG investment.
In the context of the Business Responsibility and Sustainability Report, the Committee will review leadership indicators that may be required – including those related to the value chain, along with developing sector specific sustainability disclosures.
In addition, it will examine disclosures/metrics relevant to the Indian context as well as suggest areas for assurance and a plan for implementation.
In addition, the committee will oversee the development of a second or parallel approach to ESG ratings in line with emerging markets, such as a focus on ‘S’ including job creation, and so on.
This would also include developing a uniform indicator of ‘G’ as an input to the ESG rating and/or credit rating. Whereas the reasoning on what and how qualitative factors were included in the ESG ratings/observations by ESG rating providers would also look at disclosure.
In the case of ESG Investments, the Advisory Committee will assess the ongoing improvement of disclosures relating to ESG Mutual Fund schemes, with a specific focus on mitigating the risk of mis-selling and greenwashing hazards.
The regulator said the development of ESG standards and regulations is a dynamic process which requires continuous evaluation.
The committee will also examine whether there should be any specific prudential norms in ESG funds. While evaluating the long-term plan to prescribe ESG disclosures for all mutual fund schemes, SEBI said.