India Ratings launches ESG relevance disclosure on rated firms

Ratings agency India Ratings and Research (Ind-Ra) on Thursday launched its integrated disclosure that shows how environmental, social, and governance (ESG) factors impact individual credit rating decisions.

These disclosures will be a part of rating action commentaries for all entities having listed securities whose ratings will be assigned or reviewed effective from January 1, 2022.

ESG factors determine a company’s impact on society and environment. It gives a non-financial glimpse on the prospects of future opportunities and risks to the business.

“The ESG disclosures, which will be incorporated by Ind-Ra’s analytical teams, would transparently and consistently communicate both the relevance and materiality of ESG elements to the rating decision,” Ind-Ra said.

“The E, S and G relevance can be both positive and negative and will be sector based and entity specific. The disclosures are drawn from Sustainability Accounting Standards Board’s (SASB) Global Sustainability Framework with a total of 14 factors.”

As per Ind-Ra, these factors are fundamental factors in the ESG journey of any entity and would help it to make the disclosures specific wherever these have a relevance to the rating.

“Ind-Ra relies on the information shared by the rated company including, but not limited to, public sources as part of its rating exercise.

“Our focus is purely on a fundamental credit analysis and so our ESG Relevance Disclosures are solely aimed at addressing ESG in that context.”




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