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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Sustainability Audit, ESG Rating and Emerging Mandates from Government and Regulators

Kaveri Securities Ltd, a stock broker, wants to publish its own ESG ratings of listed companies for sale to retail clients, without registering as an ERP, saying it is already SEBI-registered as a broker. How should this be viewed?

It is not permitted. SEBI registrations are activity-specific, so a stockbroker's registration does not authorise issuing ESG ratings. The entity must obtain separate registration as an ESG Rating Provider. A disclaimer or limiting coverage to index companies does not cure the lack of registration.

  1. APermitted, as any SEBI registration covers all activities
  2. BPermitted if the ratings carry a disclaimer
  3. CPermitted only for companies in the Nifty 50
  4. DNot permitted; a separate registration as an ESG Rating Provider is needed to carry on that activityCorrect

Explanation

SEBI registration is activity-specific. A broker's certificate authorises broking, not ESG rating. To offer ESG ratings as a business it needs separate ERP registration. A disclaimer or index restriction does not create authority.

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