SEBI to soon issue guidelines related to environmental, social and corporate governance space: Tyagi

SEBI is holding discussions with a view to meeting the increasing investor demand for ESG related information.

Regulator SEBI is in “active discussions” with various stakeholders to bring in greater granularity in disclosures by listed companies in environmental, social and corporate governance (ESG) space and would soon issue relevant guidelines, SEBI Chairman Ajay Tyagi said on Thursday.

“The proposed guidelines are aimed at achieving much higher level of transparency and accountability from listed entities in the ESG arena,” Mr. Tyagi said in his speech in SEBI-NISM conference.

SEBI is holding discussions with a view to meeting the increasing investor demand for ESG related information.

Mr. Tyagi noted that certain unique trends have emerged in the wake of the pandemic.

Initially, at the beginning of the pandemic, there was a concern that climate change and environmental issues may be relegated to the background as the fund raising in itself was perceived as a challenge in these difficult times.

“However, we can see that focus on ESG issues globally and in India has only increased in this financial year. In line with the general global trend of ESG becoming more and more prominent for investors, Indian investors also showed increased interest in ESG investment,” Mr. Tyagi said.

From 3 ESG mutual fund schemes at the end of financial year 2019-20, today we have total 9 ESG schemes with 6 of them added only in the last 10 months, he noted.

From around ₹2,100 crore invested in such schemes in the whole of last financial year, the amount has increased to around ₹3,800 crore in 2020-21 till January 31, 2021.

“While the trend appears to be on the rise, we still have a long way to go compared to global levels,” Mr. Tyagi said.

Noting other unique trends, Mr. Tyagi said investors are looking for diversification through investment abroad. The net inflows in dedicated overseas schemes of Mutual Funds in this financial year till January is 9 times that of the corresponding period in last financial year and 3 times while considering the entire 2019-20.

This appears to indicate increased appetite for diversification by investors through investment abroad or a general increased interest in more global exposure, Mr. Tyagi said.

“There have been several perceptible changes that the pandemic has brought into the securities market in various aspects. Some of them particularly those relating to technology changes are likely to continue even post pandemic as well,” he added.

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