SEBI and BSE lead India towards progressive ESG reporting with comprehensive guidelines, setting a global benchmark for ESG disclosure, and encouraging companies to embrace Net Zero targets and climate-aligned reporting

In India, a shift in corporate reporting is underway, driven by the evolving landscape of Environmental, Social, and Governance (ESG) factors. The Securities Exchange Board of India (SEBI) and the Bombay Stock Exchange (BSE) have introduced guidelines aimed at aligning corporate practices with India’s historical reverence for nature and society.

This shift underscores a transition from shareholder capitalism to a more balanced approach, acknowledging the Earth and society as entities to coexist with, rather than to exploit. The objective is to promote a harmonious equilibrium between growth and environmental and social well-being.

SEBI’s Business Responsibility and Sustainability Report (BRSR), introduced in 2021 and made mandatory for the top 1000 companies from FY23, is a comprehensive reporting framework that surpasses global standards. It delves into detailed categories of employee-related information, demanding precise data on health insurance coverage and various employee types.

SEBI’s efforts in the ESG reporting arena have positioned India as a trendsetter, with a pace and depth of disclosures that few can match globally. Notably, the BRSR Core, introduced in July 2023, raised the bar by requiring “reasonable assurance” – a higher level of assurance than “limited assurance” – for ESG data. This emphasis on assurance is a global first and demonstrates SEBI’s commitment to driving quality and reliability in ESG disclosures.

In terms of innovation, SEBI’s BRSR Core has introduced key performance indicators (KPIs) tailored to India’s ethos and context. Notably, it presents a novel concept – carbon intensity adjusted for Purchasing Power Parity (PPP), a first of its kind globally, applying this concept to corporate-level emissions. SEBI’s progressive approach merits praise for pushing boundaries in ESG reporting and aligning it with India’s values and context.

Building on this momentum, SEBI could consider prodding companies to establish Net Zero targets. Approximately 200 Indian companies have already declared their Net Zero ambitions and are working with the Science Based Targets Initiative (SBTi) for validation. In this regard, India could consider setting up an Indian organization akin to SBTi to vet and validate Net Zero targets, enhancing domestic capacity in this critical aspect.

Additionally, SEBI could explore regulations similar to the EU’s 2020/852, which mandates “taxonomy-aligned” reporting on Revenue, Capex, and Opex. This approach provides transparency regarding a company’s alignment with climate objectives and could further bolster India’s commitment to ESG excellence.

While Indian companies may grapple with the rapid pace of change advocated by SEBI, the overarching impact is anticipated to be positive. Improved sustainability and access to capital are expected benefits, provided corporate boards wholeheartedly embrace and implement SEBI’s ESG directives. These measures collectively propel India into a leadership role on the global ESG stage, while fostering a more responsible and sustainable corporate landscape in the country.

For more insights on ESG reporting, join us and the sustainability stalwarts from different industries on the 21^st of November at The St. Regis, Mumbai. Register here https://bwevents.co.in/bw/the-sustainable-world-conclave-mumbai/#Register to grab your spot!