Market regulator SEBI constitutes advisory panel on environment, social and governance-related matters

Capital markets regulator Sebi has constituted an advisory committee for advising on ESG (environment, social and governance) related matters in the securities market.

The committee will be headed by HDFC Mutual Fund Navneet Munot, the Securities and Exchange Board of India (Sebi) said in a statement.

Apart from Munot, the committee has experts, including R Mukundan, MD and CEO of Tata Chemicals; C Siva Kumar, executive director of NTPC, Amit Talgeri, chief risk officer at Axis Bank, Sharad Kalghtagi, ESG head Cipla; Amit Tandon founder and MD Institutional Investor Advisory Services; J N Gupta, founder and MD of Stakeholders Empowerment Services and Rama Patel, Director of Crisil Ratings.

In all, the committee has 19 members and further, four Sebi officials will be secretariat to the committee as well as co-ordinator.

The terms of reference of the committee include enhancements in business responsibility and sustainability report, ESG ratings and ESG investing.

With regards to enhancements in Business Responsibility and Sustainability Report (BRSR), Sebi said the panel will be responsible for reviewing leadership indicators that may be made essential - including those related to value chain and developing sector specific sustainability disclosures.

Also, it will review evolving disclosures / metrics that are relevant to the Indian context and identify areas for assurance and roadmap for its implementation.

In addition, the committee will be examine developing separate or parallel approach for ESG rating adapted to emerging market like focus on 'S' including employment generation.

This will also include developing uniform indicators of 'G' as input to ESG ratings and or credit ratings disclosures in the rationale by ESG rating providers on what and how qualitative factors were factored in the ESG ratings or observations.

In respect of ESG investing, Sebi said the committee will oversee continuous enhancement of disclosures specific to ESG Schemes of mutual Funds with particular focus on mitigation of risks of misselling and greenwashing.

"The evolution of standards and norms for ESG is a dynamic process which necessitates continuous evaluation," Sebi said.

It will also examine whether ESG funds need to have prudential norms, if any as well as long term plan to prescribe ESG disclosures for all mutual fund schemes.