Corporate Guide to ESG Rating Providers in India - CSR

For many years, critics of ESG have argued that it distracts from what businesses are really meant to do “make as much money as possible while following the rules of society,” as economist Milton Friedman said more than 50 years ago. Today, sustainability is no longer optional; it is a basic expectation. Investors, regulators and even customers now want to know not just how profitable a company is, but also how responsibly it runs its business. That’s where ESG rating providers come in.

ESG rating providers are independent agencies that analyse companies’ sustainability performance. They measure how well companies manage Environmental, Social and Governance (ESG) factors, giving everyone a clear way to judge corporate responsibility. They collect and evaluate information related to:

• Environmental – Emissions, energy use, resource and waste management, climate risks.
• Social – Labour practices, health & safety, community relations.
• Governance – Board structure, ethics, transparency, shareholder rights.

They then assign a rating or score to each company, indicating how well it is managing risks and opportunities in these areas.

Leading Global ESG Rating Providers:

• MSCI ESG Ratings: USA
• Sustainalytics (Morningstar): Netherlands origin 🇳🇱 (now US-owned 🇺🇸)
• S&P Global ESG Scores (formerly RobecoSAM / SAM CSA) (USA 🇺🇸 (RobecoSAM origins in Switzerland 🇨🇭)
• ISS ESG (Institutional Shareholder Services) USA
• FTSE Russell (FTSE4Good Index Series) UK

The Indian Context:

India’s ESG rating story began in 2021, when Acuité Ratings & Research, a SEBI-registered credit rating agency launched ESG Risk AI, the country’s first dedicated ESG platform. Though smaller in scale, Acuité was the pioneer, offering structured, globally aligned ESG assessments.

That same year, CRISIL, India’s largest rating agency, introduced ESG scoring with wider coverage and global methodology. In 2024, SEBI formally approved CRISIL as the country’s first official ESG Rating Provider (ERP), making its ratings the most authoritative for regulatory disclosures.

Acuité’s ESG scores remain useful for internal assessments, voluntary disclosures and investor communication, but for SEBI-mandated ESG disclosures, only ratings from SEBI-approved ERPs carry regulatory weight. While Acuité is recognized as the first mover and innovator in India’s ESG journey, CRISIL and other SEBI-approved ERPs now hold the regulatory advantage. As on September 2025, 18 rating agencies get approved by SEBI as ERPs

(https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=47).

Types of SEBI-Approved ESG Rating Providers:

Category I

ERPs offer comprehensive ESG ratings across listed companies, securities and funds, with broad national and international coverage. They follow higher governance and disclosure standards and are often preferred by large corporate and institutional investors for credibility. Examples include CRISIL, ICRA ESG, CARE ESG, NSE Sustainability Ratings.

Category II

ERPs are more specialized or niche, focusing on specific sectors, themes, or types of securities. They have lower entry requirements but remain SEBI-regulated and are typically chosen for sector expertise or cost-effectiveness. Examples include SES ESG, Globetrend, EcoRatings, MSCI India (SEBI-registered ERP).

How Companies Should Choose an ESG Rating Provider:

When selecting an ESG Rating Provider, companies should consider:

• Regulatory Approval: Only SEBI-approved ERPs are valid for official disclosures; check Category I or II.
• Business Model: Refers to who pays for the rating, issuer-pays (company pays) or subscriber-pays (investors pay). Subscriber-pays models are generally seen as more independent and credible.
• Sector Expertise: Ensure the ERP has strong methodology for your industry.
• Methodology & Global Alignment: Alignment with GRI, SASB, TCFD or EU Taxonomy ensures international acceptance.
• Global vs Domestic Reach: Multinationals may prefer ERPs with global recognition.
• Cost & Engagement: Balance fees with the depth and value of the rating.
• Investor Preference: Choose ERPs respected by your investor community.

ESG ratings enable companies to demonstrate responsible operations, manage risks and meet stakeholder expectations, while guiding investors in making informed decisions. In India, SEBI-approved ESG Rating Providers (ERPs) ensure credibility and regulatory compliance, with Category I and II ERPs offering options tailored to scope, sector expertise, and global alignment. By carefully selecting an appropriate ERP, companies can not only fulfill mandatory disclosure requirements but also strengthen their reputation, drive sustainable growth and contribute meaningfully to a more responsible and transparent business environment.

The article is written by Ms. Suhani Thepadiya – suhanimaheshwari@mmjc.in