IFSCA's New ESG Framework Sets Standards for Sustainable Finance in India
- Muhammad Ahmad
- Nov 5, 2024
- 2 min read
IFSCA defines ESG standards for transparency in India’s GIFT IFSC
IFSCA introduces a regulatory framework for ESG Ratings and Data Product Providers
IFSCA announces a new ESG regulatory framework that benchmarks global standards.
Framework aims to foster sustainable finance in India’s financial sector.
A transparent and regulated environment is set to elevate GIFT IFSC’s green finance.
The International Financial Services Centres Authority (IFSCA) has announced a new regulatory framework for “ESG Ratings and Data Products Providers” (ERDPPs), designating them as a new intermediary category under the IFSCA (Capital Market Intermediaries) Regulations, 2021. This framework follows global best practices, reflecting insights from the International Organization of Securities Commissions (IOSCO) report and the Code of Conduct issued by the International Capital Market Association (ICMA).
This regulatory move by IFSCA marks a significant step towards enhancing the sustainable finance ecosystem within GIFT IFSC, India’s international financial hub. By introducing standards for transparency and accountability, IFSCA aims to make GIFT IFSC an attractive center for ESG investments, supporting India’s broader climate and sustainability goals.
Technical Focus
India’s sustainable finance market has grown rapidly, with green bonds, ESG-focused funds, and renewable energy investments at the forefront. GIFT IFSC aims to position itself as a sustainable finance hub, attracting both domestic and international players. This framework for ESG intermediaries ensures the consistency and quality of ESG data—a critical aspect for investors.
IFSCA’s New ESG Framework at a Glance
Introduced Regulation: IFSCA introduces a regulatory framework for ESG Ratings and Data Products Providers (ERDPPs), establishing standards for transparency and reliability.
Global Alignment: The Framework is benchmarked against international best practices, including guidelines from IOSCO and ICMA, to ensure high-quality ESG assessments.
Strategic Goal: Regulations aim to position GIFT IFSC as India’s central hub for sustainable finance, supporting the growth of green and responsible investments.
The new ESG framework discussed above outlines key responsibilities and operational standards for ERDPPs, establishing measures to ensure the quality and credibility of ESG ratings. A representative from IFSCA stated, “Our objective is to create a well-regulated and transparent ecosystem for sustainable finance that aligns with global standards.”
This move concludes another milestone for IFSCA, which seeks to strengthen India’s international reputation in sustainable finance. The framework is expected to facilitate responsible investments and build investor confidence in GIFT IFSC as a center for ESG-driven financial growth.
