India’s Securities and Exchange Board (SEBI) has issued new guidelines for ESG (Environmental, Social, and Governance) rating withdrawals, a move aimed at boosting transparency, aligning with credit rating norms, and ensuring robust compliance with evolving sustainability frameworks. The directive reflects India’s efforts to enhance ESG governance while staying aligned with global carbon neutral strategy goals. 

Announced on April 29, 2025, the updated rules enable ESG rating providers to withdraw ratings under specific conditions. For subscriber-pays models, ratings may be withdrawn if there are no active subscribers or if the rated entity fails to submit a valid Business Responsibility and Sustainability Report (BRSR). However, ESG-linked indices like Nifty 50 must maintain their ratings if they retain active subscribers. 

In the issuer-pays model, rating withdrawal requires either three years of continuous coverage or rating over half the bond’s tenure, coupled with no-objection certificates from 75% of bondholders. For company-wide ESG ratings, only the three-year rating history is needed—no bondholder approval is required. Once withdrawn, ESG ratings cannot be reused or redistributed, and providers must update their policies publicly. 

SEBI’s move comes as India faces increased pressure to align with international ESG frameworks, with global regulators such as the EU and U.S. refining their climate disclosure standards. Chairperson Tuhin Kanta Pandey acknowledged industry feedback on the complexity of ESG reporting, emphasizing that SEBI would continue reviewing disclosure practices. 

Additionally, stock exchanges are now required to publish ESG ratings visibly on company and security pages to ensure investor access and improve ESG data transparency. With Moody’s rating India as high risk on environmental and social indicators, the move aims to standardize ESG accountability across capital markets and encourage responsible investment aligned with carbon neutral strategies. 

These regulatory changes are effective immediately and signify a stronger commitment by India to elevate ESG performance and investor confidence. 

Sources: 

https://esgnews.com/indias-market-regulator-sebi-issues-new-guidelines-for-esg-rating-withdrawals/ 

https://www.reuters.com/sustainability/boards-policy-regulation/indias-market-regulator-issues-norms-withdrawing-an-esg-rating-2025-04-29/ 

https://sg.finance.yahoo.com/news/indias-market-regulator-issues-norms-134202728.html