Invented by a leading institution, the Tata Energy Research Institute, this indicator will help benchmark the environment-performance of various corporates on a sector-wise basis. A voluntary indicator, the rating will help corporates identify their key strengths and weaknesses and get themselves assessed against their rivals.

"Green ratings are being used in many developing countries like Indonesia, Phillipines and Brazil where these ratings are being used as pressurising mechanism and as valuable inputs for raising their levels of adherence to environmental standard," highly placed sources in TERI said.

The Ministry of Environment and Forests has alreadyindicated its need for alternatives to the efforts by the state agencies for marking the eco-ratings. Given the lack of infrastructure on the one hand and the increasing pressure by financial institutions for adherence to environmental norms by the corporates on the other, third-party eco-rating by TERI is expected to be the best alternative.

Apart from an independent eco-rating process, TERI is also working on an effective link between the popular quality ratings like the ISO and the environment adherence indicator.

Sources in TERI said that the ISO quality awards has proliferated much amongst the Indian corporates with the financial incentives linked by the government.

In the offing is a linkage between the eco-rating and the ISO 14001 certification. The eco-rating will complement the ISO 14001 in a number of ways, according to TERI.

The ISO 14001 focusses on management systems which requires only a commitment towards `continual improvement' by a corporate. However, the absence of any tangiblemeasurable indicators in the certification criteria gives rise to the scepticism regarding its ground level efficacy.

The eco-ratings at the same time provides a ready framework for assessing the actual performance level of a facility and the trend over a period of time.

Secondly, the eco-rating will complement ISO 14001 as the former entails a gradient of performance levels. Therefore, while the ISO primarily adresses high-end performers, the eco-rating on the other hand addresses a wide cross-spectrum of corporates including the mid-level and as well as small startup corporates.

For instance, even corporates which have not succeeded in getting certifications can work towards by their voluntary getting assessed under the scheme.

At the same time certified corporates can use the indicator to monitor their performance over a period of time. An added advantage of the voluntary eco-rating is that the corporate entity may not make the indicator public. This would also ensure that the corporate entitywhich is being rated will participate in all the key essential issues related to environmental adherence as is the case otherwise when corporates are pressurised to get a eco-rating done.

Even though the concept is yet to catch on with the leading lndian banking and financial sector, RBI and Indian Bank Association are likely to work towards demanding such a eco-rating exercise from corporates before granting working capital finance approvals.