SEBI forms advisory panel on ESG-related matters
Recently the Securities and Exchange Board of India (SEBI) has constituted an advisory panel on environmental, social and governance (ESG) related matters.
The terms of reference for the panel:
- Improving the Business Responsibility and Sustainability Report (BRSR),
- ESG Rating, and ESG Investing.
- ESG norms are a set of standards for a company’s operations. It is used by socially conscious investors to scrutinize potential investments.
ESG:
- Environmental-E Criteria: It considers the fact that how a company performs as a manager of nature.
- Social-S Criteria: It examines how a company manages relationships with employees, suppliers, customers, and communities in its area of
- Governance-G: Under this, the leadership, audit, internal control, rights of shareholders etc. of a company.
Benefits of ESG –
- This helps the investor to set his investment goals in line with his personal values and beliefs.
- This helps in the availability of capital by attracting increasing perpetual funds.
- This improves the performance of companies and the performance of stocks. At the same time, it also provides capital to companies at a lower cost.
Other benefits:
- energy consumption is reduced,
- encourages employee enthusiasm,
- attracts talent,
- Increases in social credibility etc.
Status of ESG in India –
- SEBI has released the notification for inclusion of ESG reporting under BRSR for listed companies.
- The BRSR will be applicable to the top 1000 listed companies by market capitalisation. Also, reporting of BRSR has been made mandatory from FY 2022-23.
Source – The Hindu
