Green Ratings

Green Ratings


Green rating is an estimate of an industry’s environment friendliness. It assesses the adverse impact on environment caused by an industry’s activities and methods adopted by an industry to minimize the damage. This assessment is done by a credible third party evaluator. The rating is arrived at after considering industry’s current processes and technology and their impact on the environment, adoption of clean technology and various processes adopted for mitigating adverse impact on environment.


Relevance of Green Rating Around the World

Rapid industrialization and the associated global warming have placed a question mark on the sustainability of the planet’s delicate ecological balance. The “United Nations Framework Convention on Climate Change (UNFCC)” and more particularly the “Kyoto Protocol” have placed stringent and legally binding Green House Gas (GHG) emission norms on developed / industrialized countries. Countries like the USA and those within the EU have also imposed carbon taxes on fossil fuel based industries.

The increased awareness about environmental degradation is making environmental regulations more stringent the world over. The MSME sector cannot remain insulated from this trend. Exporting MSMEs may soon see themselves set against trade barriers such as the impending imposition of carbon taxes by European countries. In order to position themselves as responsible corporate citizens and as a preventive measure against probable censure from environmental organizations like Green Peace, MSMEs will feel the need for Green Ratings in near future.


Green Rating in India

Green Rating initiatives in India are spread across various sectors ranging from buildings to manufacturing industries.

Green Building Initiative

In order to create more energy efficient and eco friendly buildings, the Ministry of New and Renewable Energy in collaboration with The Energy and Resource Institute (TERI) initiated Green Rating for Integrated Habitat Assessment (GRIHA), the National Rating System for Green Buildings in India. GRIHA rating system consists of 34 criteria categorized under various sections such as site selection and site planning, conservation and efficient utilization of resources, building operation and maintenance, and Innovation points. For further details, visit GRIHA.

Green Rating Project

It is a non government initiative launched by Centre for Science & Environment (CSE) in 1995 to guide Indian industries to improve their environmental performance. The project mainly relied on voluntary participation of companies and depended up on the company’s eagerness to avoid bad publicity as these ratings are released for public. Along with the assignment of Green Rating, the initiative charted out steps need to be taken by each industry to improve their performance. In majority of the cases, the companies have implemented the road map provided by CSE. The industries covered in this project are paper and pulp, cement, automobile and the chlor alkali sector. For further details visit Green Rating Programme. A larger proportion of companies rated for green credentials under this programme are large enterprises.

SMERA Green Ratings

In India Green Rating of enterprises is offered by SME Rating Agency of India Limited (SMERA). Green Rating is a joint initiative of SMERA and SIDBI. The Energy and Resource Institute (TERI) acts as a Knowledge Partner. SIDBI promotes and facilitates the process by offering credit at concessional rate to Green Rated companies. The Government of India (GoI) has urged lending institutions to encourage borrowing MSMEs to go for “Green Rating”.

SMERA is only agency that exclusively caters to Indian MSMEs’ “Green Rating” needs. Read extract on Green Ratings from OPTIMiSM (SIDBI bi-monthly magazine).


Benefits of Green Rating

  • An independent third party evaluation about environment friendliness: It indicates that the MSME is conscious about its duty towards environment and society at large
  • Credit at concessional rate: It will help a MSME to obtain credit at a concessional rate from lenders like SIDBI
  • Mitigation of environmental risk: It reduces the risk associated with the stringent environmental norms that is becoming stricter
  • Confidence among value chain partners: The rating assures lenders, buyers, collaborators, JV partners that the MSME is a responsible corporate citizen and does not adversely impact ecology
  • Self assessment tool: Green Rating is a self assessment tool that can be used to identify areas of improvement
  • Creating awareness: Green Rating awarded by an independent agency improves the visibility of MSME in the eyes of various stakeholders like buyers, suppliers, collaborators/JV partners etc


Green Rating Process

A typical Green Rating process is described in the below diagram. Typically the entire process starting from information receipt to assignment of rating takes 15 business days (Source: SMERA). The cost of Green Rating conducted by SMERA is Rs. 50,000 (Service tax extra).

  1. Request for Rating by MSME
  2. Submission of Financial and Managerial Information
  3. Finalising the Assignment and Detailed Questionnaire
  4. Site Visit and Discussion with Management
  5. In-Depth Analysis, Industry Research and Draft Report
  6. Proposed Rating before Rating Committee
  7. MSME Advised on Rating
  8. Appeal before Rating Committee
  9. Publishing of Final Rating


Indicative List of Documents Required

1.    SSI registration certificate/Entrepreneurs memorandum

2.    Audited accounts report and balance sheet of last three years

3.    Pollution control certificate for air, water & noise pollution

4.    Latest test results conducted by Pollution Control Board

5.    ISO Certificate or any other quality certificate

6.    Energy audit certificate, if any

7.    Details of process map and energy usage as per process map

8.    Any specific step by unit to mitigate harmful impact on environment


How can I use a Green Rating?

  • To establish MSME as a responsible corporate citizen who is sensitive to the environment
  • Establishing credibility in the eyes of buyers, suppliers, technical collaborators, JV partners
  • To execute projects in environmentally sensitive areas
  • To identify the best practices prevailing in the industry and areas of improvement