ESG ratings are assessments of a company's environmental, social, and governance performance by specialised agencies. Major providers include MSCI, Sustainalytics (Morningstar), S&P Global (CSA), ISS ESG, CDP, and FTSE Russell. In India, SEBI has regulated ESG rating providers since July 2024. Ratings influence investment decisions, index inclusion, cost of capital, and corporate reputation. Divergence between rating providers (low correlation of ~0.5) remains a challenge for the ESG ecosystem.
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