
SEBI’s ESG Reforms Usher in Transparency, Face Teething Issues
Looking ahead, SEBI is eyeing alignment with global frameworks like ISSB and TCFD by 2026, aiming to make ESG a strategic cornerstone rather than a compliance burden

The Securities and Exchange Board of India’s (SEBI) April 29, 2025, circular on ESG Rating Providers (ERPs) has reshaped India’s capital markets, with its key provisions now in full swing, as per the July 11 Master Circular (SEBI, April 29, 2025; SEBI, July 11, 2025).
By mandating public disclosure of ESG scores on stock exchanges and company websites, requiring ERP registration, and enforcing strict rating withdrawal rules—such as bondholder consent or minimum three-year coverage—SEBI is driving unprecedented transparency (SEBI, April 29, 2025).
This empowers investors, particularly retail ones, to weigh sustainability alongside profits, while pushing companies to prioritise environmental, social, and governance (ESG) standards.
The rules are clear: subscriber-pays ratings can only be withdrawn if there are no active subscribers or if firms skip their Business Responsibility and Sustainability Report (BRSR).
Index-linked ratings, like those tied to the Nifty 50, remain in place as long as the index has subscribers. For issuer-pays bond ratings, withdrawal requires 75% bondholder approval or coverage for half the bond’s tenure. Mergers or repaid bonds allow withdrawals, but only with proper documentation (SEBI, April 29, 2025).
Yet, challenges loom large. SEBI has flagged inconsistent data quality and a shortage of assurance providers for ESG/BRSR reports, raising concerns about the reliability of ratings (SEBI, September 2025).
Some ERPs are still refining their methodology disclosures, though efforts to standardise are ongoing (SEBI, July 2025). Smaller companies, in particular, struggle with BRSR compliance, which could undermine the system’s effectiveness.
Looking ahead, SEBI is eyeing alignment with global frameworks like ISSB and TCFD by 2026, aiming to make ESG a strategic cornerstone rather than a compliance burden (SEBI, July 2025).
These reforms position India’s markets as a hub for sustainability-focused investors, but addressing capacity gaps and data inconsistencies is critical to sustaining this momentum.
For now, SEBI’s bold push is setting a new benchmark for transparency, even as it navigates early hurdles.
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