Mar 18, 2024

Driving Sustainable Business Practices: the SEBI’s BRSR Core Framework and Internationally Evolving ESG Disclosures

Aditya Jalan and Ankitesh Ojha explore the legal landscape of ESG disclosures in India and internationally, as well as the latest reporting frameworks.


Environmental, social and governance (ESG) refers to a set of measures and strategies adopted by organisations to minimise adverse impacts and promote positive outcomes related to the environment, societal issues and governance structures:

  • environmental criteria evaluate a company’s eco-friendly activities;
  • social criteria examine its interactions with stakeholders, workers and communities; and
  • governance criteria assess the structure and transparency of the company.

In the ever-evolving financial landscape, investors no longer evaluate a company solely based on its balance sheet and profit margins. Recognising the importance of concerns related to ESG, regulatory institutions across the world are actively developing frameworks to ensure that businesses adopt responsible practices. Global ESG regulations have evolved significantly, with frameworks such as the Global Reporting Initiative (GRI), Climate Disclosure Standards Board (CDSB) and United Nations Global Compact (UNGC) gaining widespread acceptance. The European Union’s (EU) European Sustainability Reporting Standards (ESRS) mandate detailed sustainability reporting for companies. Similarly, ESG reporting in the United Kingdom (UK), governed by the Sustainability Disclosure Requirements (SDR), aims to help businesses manage sustainable practices.

In India, the Securities and Exchange Board of India (SEBI) has notified ESG metrics within the Business Responsibility and Sustainability Report Core (the “BRSR Core”). Introduced in July 2023, the BRSR Core is a set of mandatory ESG disclosures that the top 150 listed entities in India must report on, starting from the financial year ending March 2024. The BRSR Core consists of key performance indicators (KPIs) under nine ESG attributes (including greenhouse gas, water and energy footprint, embracing circularity, enhancing employee well-being, etc).

“The BRSR Core… reflects the SEBI’s dedication to promoting transparent and sustainable business practices.”

As a result of these regulatory developments, Indian companies are increasingly prioritising their ESG responsibilities. Many companies, including Infosys, Tata Consultancy Services, Wipro, and Larsen & Toubro, have made commitments that highlight the importance of implementing the BRSR Core framework. For instance, Infosys has opened a new development centre in India focused on cloud and AI technologies, with the aim of engaging local talent. The facility accommodates around 1,000 employees and adheres to green building standards, which reflects Infosys’ ESG commitments.

Understanding the Legal Framework Introduced by the SEBI for Regulating ESG

ESG reporting in India began in 2009, when the Ministry of Corporate Affairs (MCA) issued guidelines on corporate social responsibility. Since then, the reporting framework has evolved significantly with the introduction of business responsibility reports (BRRs), national guidelines on responsible business conduct, and business responsibility and sustainability reports (BRSRs).

The SEBI made it mandatory for the top 100 listed companies by market capitalisation to file a BRR capturing their non-financial performance across ESG factors. In May 2021, the SEBI expanded the BRR and replaced it with a new BRSR with effect from the fiscal year 2022–2023. Moreover, the SEBI mandated the top 1,000 listed entities by market capitalisation to include a BRSR in their annual report. The BRSR Core, operational from FY2023, reflects the SEBI’s dedication to promoting transparent and sustainable business practices. This framework establishes specific parameters for ESG reporting. The reporting format is divided into three sections:

  • general disclosures;
  • management and process disclosures; and
  • principle-wise performance disclosures.

With increasing awareness among organisations regarding the environmental repercussions of supply chains, the BRSR Core advises companies to disclose their value chain ESG metrics (a value chain shall encompass the top upstream and downstream partners of a listed entity, cumulatively comprising 75% of its purchases/sales (by value) respectively).

The requirements of the BRSR Core are applicable in phases, as follows:

  • FY2023–2024 – applicable to the top 150 listed entities by market capitalisation;
  • FY2024–2025 – applicable to the top 250 listed entities by market capitalisation;
  • FY2025–2026 – applicable to the top 500 listed entities by market capitalisation; and
  • FY2026–2027 – applicable to the top 1,000 listed entities by market capitalisation.

Importance of ESG Reporting

ESG reporting is important both for organisations and investors. Such disclosures aim to foster transparency and accountability, which in turn provides regulators, investors, lenders and stakeholders with in-depth insights into a company’s operations. Furthermore, it provides an opportunity for organisations to track their growth by identifying potential areas of risks, and to enhance their efficiency. Indian businesses are increasingly incorporating sustainability practices, with 75% actively reporting on their sustainability and ESG performance, as per a recent survey conducted by the consulting and research agencies.

“The similarity in overall metrics between the EU and India indicates a global trend towards standardisation in ESG reporting.”

International Perspective: ESG Regulations

Global practices regarding ESG regulations have undergone significant developments. Several prominent global ESG and sustainability frameworks have gained widespread acceptance among businesses, including the GRI, CDSBand UNGC.The EU has established a robust ESG regulatory framework byadopting a set of mandatory ESG reporting standards, the ESRS, in July 2023It requires companies to provide detailed sustainability information regarding their direct operations and supply chains. These standards are a subset of the Corporate Sustainability Reporting Directive (CSRD) and shall be implemented in phases.

The UK enacted two mandatory ESG disclosure laws in 2022, which included:

  • the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022; and
  • the Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022.

In the UK, ESG regulations are scattered among various domestic and EU-derived legislations, such as the Companies Act and the Corporate Governance Code, which provide guidance on board leadership, risk and internal control practices, and which collectively aim to enhance transparency. Additionally, from 2023, ESG reporting in the UK is also governed by the SDR,which provides a framework enabling businesses to manage sustainable practices, possible risks and repercussions, while also defining measurable goals and targets.

The United States is still undergoing a shift from a voluntary to a compulsory ESG regulatory framework, aligning with the EU’s standards. A major development is the Securities and Exchange Commission’s proposal, “Enhancement and Standardization of Climate-Related Disclosures for Investors”. This initiative mandates public companies to include climate-related data in their public disclosures.

It is worth noting the global trend towards similar ESG metrics, although the specific details and compliance requirements may vary. For example, the EU’s ESG disclosure requirements set specific metrics for companies to report on environmental aspects (climate, pollution, water and marine resources, biodiversity and ecosystems) and social aspects (welfare and rights of workers at each level of the value chain), among others. Similarly, in India, ESG metrics focus on greenhouse emissions, water footprint, employee well-being, gender diversity and inclusive development, etc. The similarity in overall metrics between the EU and India indicates a global trend towards standardisation in ESG reporting. This provides investors with a clearer and more consistent view of companies’ sustainability practices and performance across different regions.

Way Forward

The SEBI has undoubtedly strengthened the framework for ESG in India. Although these recent regulatory developments play an important role in shaping the ESG regulatory framework in India, the current framework may face enforcement issues. The regulatory landscape governing ESG aspects in India is not consolidated under a single legislation but spans various enactments. For instance, the Energy Conservation Act, 2001 (as amended in 2022) deals with crucial aspects of ESG such as energy conservation, carbon emissions, etc.

Furthermore, both the central and state governments have introduced a variety of ESG policies that are applicable across different sectors. Thus, unified legislation will not only enhance regulatory efficiency but will also contribute to building a sustainable and transparent business environment in India. A further challenge on India’s radar and that of numerous other countries will be centered around standardisation of ESG metrics, as increasingly more metrics and regulations evolve internationally.

The need for consistent and quantitative metrics was also highlighted by the International Organisation of Securities Commissions in its sustainable finance work plan. This would not only simplify compliance but would also ensure consistency in reporting standards.

Furthermore, uniformity is essential for investors to make informed decisions, compare ESG performance effectively, and assess risks consistently. The consistency with which the SEBI implements and evolves ESG norms, and the steps it takes to ensure compliance, remain to be seen. Maintaining the head-start taken by the SEBI and uniformly enforcing globally recognised ESG standards in India is crucial in the global context, as it ensures that Indian companies adhere to internationally recognised standards and ESG norms.





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