ESG Rating and ESG Score: How Companies Are Evaluated

An ESG rating or ESG score measures how well a company performs across Environmental, Social, and Governance factors, typically expressed on a standardized 0-100 scale under SEBI’s framework for ESG rating providers in India. CRISIL, one of India’s leading ESG rating agencies, weighs Environment at 35%, Social at 25%, and Governance at 40% when calculating a company’s overall score.

How ESG Scores Are Calculated

ESG rating agencies assess companies across hundreds or even thousands of individual data points spanning dozens of industry sectors, since what matters environmentally and socially for a manufacturing company differs considerably from what matters for a financial services firm. CRISIL, for example, evaluates more than 1,000 data points across roughly 65 sectors, scoring companies individually on Environment, Social, and Governance factors before combining them into a single weighted score using SEBI’s standardized 0-100 scale, where 100 represents the highest possible rating. Consequently, a company’s final ESG score reflects a detailed, sector-specific assessment rather than a generic checklist applied uniformly across all industries.

Why ESG Scores Vary Between Rating Agencies

Even under a broadly standardized scale, different rating agencies can arrive at meaningfully different scores for the same company, since each agency applies its own proprietary methodology, data sources, and weighting emphasis across the three ESG pillars. Additionally, some agencies rely more heavily on company-disclosed data, while others incorporate independent research, media reports, and third-party data sources, which can surface issues a company’s own disclosures might not fully capture. Therefore, investors and analysts generally benefit from reviewing scores from more than one rating provider rather than relying on a single agency’s assessment as definitive.

Who Provides ESG Ratings in India?

CRISIL, one of India’s most established credit rating agencies, has expanded into dedicated ESG ratings using its sector-specific proprietary methodology. Other major credit rating agencies operating in India, including ICRA and CARE, similarly provide ratings and analysis relevant to ESG performance, reflecting the broader convergence between traditional credit assessment and sustainability evaluation. As of the 2025-26 regulatory cycle, SEBI requires ESG rating providers to follow standardized scoring formats, giving environmental and social impact metrics the same structured, comparable format that financial credit ratings have long had.

How to Interpret an ESG Score

A higher ESG score generally indicates stronger performance across environmental impact, social responsibility, and governance quality, but the practical interpretation depends heavily on how a score compares to industry peers rather than as an absolute figure alone. For example, a mid-range ESG score in a heavy manufacturing sector might represent genuinely strong relative performance, while the same numerical score in a lower-impact service sector could indicate room for meaningful improvement. Consequently, comparing a company’s ESG score against sector benchmarks, rather than viewing it in isolation, gives a more accurate picture of actual performance.

Using ESG Scores in Your Own Research

Whether you’re an investor, business partner, or simply researching a company’s sustainability credentials, cross-referencing ESG scores with the underlying BRSR disclosures gives a fuller picture than the score alone. To understand the reporting framework these scores draw on, see our guide on ESG reporting and BRSR in India, and get a preliminary sense of a company’s standing using GreenNewsDesk’s ESG Score Self-Assessment Tool. Browse more explainers in the Green Finance & Business category.

Major ESG Rating Agencies in India

Several agencies provide ESG ratings for Indian companies, and their scores do not always agree. CRISIL, ICRA ESG Ratings, and CareEdge ESG are domestic agencies that assess companies using India-specific regulatory and sector context. Global agencies like MSCI ESG Ratings and Sustainalytics also cover large Indian companies, often applying globally standardised criteria that can produce different scores than domestic agencies for the same company. This divergence happens because each agency weighs environmental, social, and governance factors differently and may rely on different data sources. As a result, investors comparing ESG scores across agencies should check the underlying methodology rather than assuming all ESG ratings measure the same thing. Investors and companies alike should therefore treat ESG scores as one input among several rather than a definitive verdict on sustainability performance.

Frequently Asked Questions

What is an ESG score?

An ESG score measures how well a company performs across Environmental, Social, and Governance factors, typically on a standardized 0-100 scale under SEBI’s framework in India.

How does CRISIL weight ESG factors?

CRISIL weighs Environment at 35%, Social at 25%, and Governance at 40% when calculating a company’s overall ESG score.

Why do ESG scores differ between rating agencies?

Each agency applies its own proprietary methodology, data sources, and weighting emphasis, meaning the same company can receive meaningfully different scores from different providers.

Is a higher ESG score always better?

Generally yes, but interpretation depends on comparing scores against industry peers, since acceptable scores vary significantly by sector.

Who provides ESG ratings in India?

CRISIL, ICRA, and CARE are among the major agencies providing ESG-related ratings and analysis in India, alongside global providers.