SEBI Forms Working Group to Review ESG Rating Provider Rules

Press Release No. 13/2026; Dated: 18.02.2026

The Securities and Exchange Board of India (SEBI) has constituted a Working Group to review the regulatory framework governing ESG Rating Providers (ERPs). The move is aimed at strengthening the credibility and usefulness of ESG ratings in the Indian securities market.

1. Purpose of Constituting the Working Group

The Working Group has been formed to undertake a structured review of the ERP ecosystem, given the growing role of ESG ratings in:

• Investment decision-making
• Risk assessment
• Stewardship and disclosure practices

2. Terms of Reference of the Working Group

SEBI has outlined the following key terms of reference:

2.1 Comprehensive Review of Existing Framework

• Undertake a detailed review of the current regulatory framework applicable to ESG Rating Providers
• Identify gaps, operational issues, and areas requiring clarification

2.2 Examination of Market Representations

• Examine representations and suggestions received from market participants
• Consider concerns from issuers, investors, ERPs, intermediaries, and other stakeholders

2.3 Recommendations to Improve Trust and Quality

• Recommend measures to enhance:

1. 1. Transparency in rating processes and methodologies
   2. Reliability and consistency of ratings
   3. Investor confidence in ESG assessments

2.4 Review of International Developments

• Evaluate international regulatory developments in the ESG ratings space
• Identify areas where Indian regulations can align with global best practices, while factoring in the Indian market context

3. Expected Regulatory Outcome

Through this Working Group, SEBI is expected to move towards:

• Stronger governance and disclosures by ERPs
• Better comparability and interpretability of ESG ratings
• Reduced conflicts of interest and improved accountability
• Alignment with evolving global approaches without ignoring local realities

4. Key Takeaway

SEBI’s Working Group initiative signals a focused push to strengthen the ESG ratings ecosystem by reviewing existing regulations, incorporating stakeholder feedback, and aligning with global best practices to improve transparency, reliability, and investor trust.

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