Sebi Raises Concerns Over ESG Greenwashing & Disclosures

Mumbai, Jan 31 (PTI) A Sebi member on Friday expressed concerns over greenwashing and misleading disclosures related to ESG metrics.

Speaking at the ESG Summit organised by the industry body FICCI here, Sebi Whole-Time Member Amarjeet Singh also said that regulators need to enhance their oversight capabilities and introduce legislative changes as the sustainable finance market expands.

"The claim made in the BRSR report on the manufacturing sector states there is no significant impact on the environment, whereas the company was facing legal action for environmental law violations. In the automobile sector, the claim was that recycled input material was used, but there was no data on recycled or reused plastic despite a major input impact," he said.

Greenwashing refers to claims by companies about any product or service having a climate-friendly impact.

To promote ease of doing business, Sebi earlier this month provided relaxation in the timeline for review of ESG rating following the publication of Business Responsibility and Sustainability Reporting (BRSR).

Earlier in December, the market regulator decided to defer the ESG disclosure deadline for value chain partners of listed companies by one year until FY26, giving more time to them to comply with the BRSR requirements.

"Whatever you are claiming must be correct. And if it is not, that is why there is a need for assurance and ethical standards. And if you are not, then of course the regulations begin and so on," said Singh, citing examples from his counterparts in the US and Australia, which have slapped heavy penalties on companies found violating the norms.

"Greenwashing, which I just demonstrated to you, some examples by corporates and by investment funds is another challenge that will intensify as the sustainable finance market expands. To address this, we as regulators will have to enhance our oversight capabilities and also the required legislative changes," he added.

Noting that the goal is a future where sustainability is woven into the fabric of our financial systems, he said this is a lot of words, but it has to be woven into the fabric of our financial systems.

" This is going to be a collective journey and a number of stakeholders, investors, companies, regulators and civil society will have to coordinate and collaborate in the shift towards more informed capital markets and more inclusive and sustainable economies that better serve our environment and society," he said.