Issuer-pays model
ESG & GovernanceA business model in which the rated company pays the ESG rating provider for its rating.
Issuer-pays ratings can be shared widely, but the provider is paid by the company it rates, which creates an obvious conflict of interest. Under SEBI's rules, the terms must be set out in a written contract, and an issuer-pays rating of a security can be withdrawn only after at least three years or half the security's life, whichever is longer, with a no-objection from holders of 75% of the bonds by value. An ERP cannot mix this model with subscriber-pays.
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