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Environment, Social and Governance Rating: ESG Risk AI aims to expand coverage by 500 more listed cos before fiscal end

KR Srivats New Delhi | Updated on August 30, 2021

Sankar Chakraborti, CEO of Acuité group

SMERA to roll out start-ups rating service from November, says Acuite Group CEO Chakraborti

ESG Risk AI, the country’s first ESG Rating company, plans to bring by March 2022 another 500 listed companies under its rating universe for Environment, Social and Governance (ESG) assessment, Sankar Chakraborti, CEO, Acuite Group, has said.

Its ESG Rating service, which was launched in June this year, already covers top 500 listed companies, Chakraborti told BusinessLine. Going forward, next fiscal the company will look to do ESG rating of 2,000 overseas companies and thereby become a global service provider.

An ESG Rating is basically a measure of a company’s resilience to long-term and industry material environmental, social and governance (ESG) risks. ESG information of listed companies have always been valued by the global capital market and is now taken into consideration in investment screening process. An outstanding ESG rating reflects market recognition of the company’s social responsibility efforts and help improve the brand image of the entity. It is important to understand the risk management framework and how the company is going to perform in mitigating the risk on ESG.

“In ESG, we are not rating the financial statements of the company. We are rating the long-term sustainability of the company. It is ESG rating of the company. It is rating of survivability of the company,” Chakraborti said.

ESG Risk AI, which is part of the Acuite Group, works on subscription fee model for its ESG Rating service. In the first month since launch of the ESG Rating service, the company has got 10 subscribers and the aspiration is to have 50 subscribers by this fiscal-end, Chakraborti said.

Chakraborti also made it clear that ESG Risk AI does not approach the company (that is being rated) for information. All the information is obtained from public sources, he added.

Asked as to why ESG Risk AI wants to become a global service provider for ESG Ratings, Chakraborti said that it will enable domestic companies to benchmark themselves against their global competitors. For instance, an Indian Oil Corporation can compare itself against how an Exxon Mobil or BP is faring on ESG, he said.

Start-up rating

Meanwhile, SMERA Ratings & Gradings (SMERA), which is part of Acuite Group, will from November this year embark on a new service line of rating of start-ups. “If you want to buy certain things from start-up, you will see if company has good rating or not. We already rate SMEs at a small fee. So we know how to rate start-ups using technology. By November 2022, we want to do rating for at least 1,000 start-ups,” Chakraborti said.

The business model for start-up rating will be pay per use while in the case of ESG Rating, it will be a licence fee for one year, he explained.

Published on August 30, 2021

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