TaxTMI 
TaxTMI 
Clarificatory and Procedural changes to aid and strengthen ESG Rating Providers (ERPs)
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....ntation received from ERPs and feedback from various stakeholders through public consultation, the following clarifications/ guidelines in respect of provisions of the Master Circular are being specified: 1.1. Withdrawal of ESG ratings 1.1.1. Para 13.1 of the Master Circular provides as under: "Regulation 28M of CRA regulations prescribe, inter-alia, that an ERP shall not withdraw an ESG rating except in cases where the rated issuer, or the issuer whose security is rated, is wound up or merged or amalgamated with another company, or except in cases as may be specified by SEBI from time to time. Further, subject to CRA Regulations, ERP&nb....
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....% of the tenure of the security, whichever is higher, and having received NOC from 75% of the bondholders by value. ii. In case of rating of an issuer/ entity, the ERP may withdraw the rating subject to the ERP having rated the issuer/ entity continuously for 3 years. 1.2. Disclosure of Rating Rationale on the website of ERP 1.2.1. Para 11.3 of the Master Circular specifies the minimum disclosures to be made in the ESG Rating Rationale/ ESG Report by all ERPs. Further, Para 20.2 of the Master Circular, inter alia, provides for continuous disclosure of Rating Rationales and Rating Reports on the ERP's website. 1.2.2. It is clarified that ERPs following a Subscriber-Pays busine....
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.... Exchange(s) 1.3.1. For ESG ratings of an issuer/ entity, the stock exchange where such issuer is listed shall prominently disclose the ESG rating on its website under a separate tab/ section on the listed company's page. 1.3.2. For ESG ratings of a debt security, the stock exchange where the security is listed shall prominently disclose the ESG rating on its website under a separate tab/ section on the listed security's page. 1.3.3. The format for disclosure of ESG ratings, as specified in Para 1.3.1. and 1.3.2., shall be as under: Name of the rated issuer or security Symbol or ISIN, as applicable Sector ESG rating Date of rating ERP Name Business Model of ERP (i.e. Subscriber-pay....
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.... constitution of ESG Ratings Sub-Committee and Nomination and Remuneration Committee (NRC) by ERPs. Considering the challenges faced by Category II ERPs in the initial years of operation, the requirement for constitution of an ESG Ratings Sub-Committee and NRC shall become effective for Category-II ERPs after a period of two years from the date of issuance of this Circular. Until the said time, the relevant issues under the purview of NRC and ESG Ratings Sub-Committee may be handled by the Board of the Category II ERP. 2. The circular shall be applicable with immediate effect. 3. This circular is issued with the approval of competent authority, in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of I....
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.... Name of Company Points to be considered for appeal Link for public document/ disclosure Authorized Signatory [Name] [Designation] [Contact Information] Standards for Clarifications to be provided by the ERP to the rated entity To maintain transparency while safeguarding the ERP's intellectual property, the following standards will govern the nature and scope of clarifications provided to the rated entity in response to their comments on the rating rationale: 1. Purpose The ERP will address valid concerns and ensure that the rating process is transparent and comprehensible. Proprietary models, algorithms, and benchmark datasets used i....