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According to brokerage firm CLSA, India’s central public sector enterprises (CPSEs) have been at the lower end of governance scores due to delays by the government in the appointment of independent directors (IDs).
India’s central public sector enterprises (CPSEs) have been at the lower end of governance scores due to delays by the government in the appointment of independent directors (IDs), leading to a 66 percent fall in their count in FY19-1HFY22, noted brokerage firm CLSA.
This is severe on CPSEs, as they have little control over the appointment of IDs, being coordinated by line ministries and over-regulation of the business from a minority perspective.
CLSA noted that this delay cost the Power Grid Corp of India Ltd (PWGR) a one-notch ESG (Environmental, Social, and Governance) rating downgrade and a lack of an upgrade for NTPC despite commendable actions on energy transition.
Time for the system to wake up to new ESG realities
What regulators want
However, a CNBC-TV18 check suggests the tide is turning now, with the government getting back to business. We see NTPC, PWGR and IOC as key beneficiaries.
Worst may be over, governance-led ESG rating upgrades expected
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