The Securities and Exchange Board of India (SEBI) has issued a new mandate requiring all public limited companies managing or promoting Environmental, Social, and Governance (ESG) funds to register these funds with SEBI, effective from March 1, 2027. This directive aims to establish greater transparency, accountability, and investor protection in the fast-growing ESG investment space. It also aligns India’s financial markets with global best practices in sustainable finance and helps prevent “greenwashing” — the misrepresentation of investments as environmentally or socially responsible.

Under the revised framework, any public limited company that launches, manages, or raises capital through ESG-focused mutual funds, ETFs, private equity vehicles, or sustainability-linked portfolios must submit detailed disclosures to SEBI at the time of fund registration. This includes providing information on investment strategy, ESG screening criteria, third-party ESG rating methodologies, monitoring frameworks, and impact assessment protocols. Companies must also ensure that ESG funds meet the minimum environmental or social outcome thresholds and regularly report their performance against pre-disclosed benchmarks.

SEBI has also mandated quarterly disclosures to investors, along with annual third-party ESG audits for registered funds. Companies that fail to register such funds or provide misleading disclosures may face penalties, including cancellation of fund registration, fines, and market bans for fund managers. In parallel, SEBI will launch a public ESG Fund Registry, allowing investors to view the credentials, disclosures, and impact history of all SEBI-registered ESG funds. This move is expected to enhance market credibility, attract institutional ESG capital, and promote genuine sustainability-oriented investments by public companies across India.