Strengthening Sustainability Disclosures in India

The Securities and Exchange Board of India (SEBI) continues to push for greater transparency and accountability in Environmental, Social, and Governance (ESG) reporting. In December 2024, SEBI released a circular titled “Industry Standards on Reporting of BRSR Core”, introducing stricter guidelines for listed companies to standardize ESG disclosures and enhance sustainability reporting.

This circular builds upon SEBI’s BRSR Core framework, introduced in July 2023, by setting clear expectations for corporate ESG performance and aligning Indian disclosures with international standards.

Key Highlights of SEBI’s December 2024 Circular

1. Standardization of ESG Reporting

SEBI mandates that companies present their ESG data in a uniform and comparable format. By aligning with global frameworks such as:

• Global Reporting Initiative (GRI)
• Task Force on Climate-related Financial Disclosures (TCFD)
• International Sustainability Standards Board (ISSB)
• United Nations Sustainable Development Goals (UN SDGs)

Indian businesses can enhance credibility and meet the expectations of global investors. Standardized reporting will also help regulators and stakeholders assess sustainability performance more effectively.

2. Mandatory Independent Assurance for ESG Disclosures

To prevent greenwashing and ensure credibility, SEBI now requires companies to obtain third-party assurance for their BRSR Core disclosures.

This means:

• ESG data must be audited by independent experts.
• Companies must follow SEBI’s recommended assurance guidelines.
• Investors can trust verified sustainability claims.

By making ESG disclosures more reliable, SEBI aims to strengthen investor confidence and corporate accountability.

3. Value Chain Disclosures: Expanding ESG Scope

SEBI acknowledges that a company’s sustainability impact extends beyond its direct operations. New disclosure requirements now include:

• Supplier and vendor ESG performance
• Carbon footprint from logistics and supply chains
• Social impact of outsourced manufacturing

This ensures companies are accountable for their entire value chain, aligning India’s reporting standards with global best practices.

4. Audit Committee Oversight on ESG Reporting

SEBI has enhanced governance requirements by involving Audit Committees in ESG oversight. Listed companies must now:

• Ensure Audit Committees review & approve ESG disclosures before publication.
• Oversee the assurance process to maintain independent auditing.
• Address ESG risks in both financial and non-financial reports.

This move strengthens board-level accountability and ensures ESG is integrated into corporate governance frameworks.

5. Enhanced Stakeholder Engagement

SEBI encourages companies to actively engage with stakeholders and integrate their feedback into ESG strategies. Companies must disclose key ESG concerns raised by:

• Investors
• Regulators
• Employees
• Local communities

By fostering open communication, SEBI aims to ensure that sustainability efforts are aligned with real-world expectations.

What’s Next? SEBI’s Future ESG Roadmap

Looking ahead, SEBI’s evolving ESG framework will likely introduce:

• Expanded assurance requirements beyond BRSR Core.
• Stricter penalties for non-compliance.
• Integration of ESG performance into financial risk assessments.
• New guidelines for ESG ratings and benchmarking.

These developments will further enhance India’s leadership in sustainable finance, encouraging companies to adopt stronger ESG strategies.

Why This Matters for Businesses

For companies: Greater ESG accountability and compliance.

For investors: More reliable, standardized ESG data.

For India: A stronger push towards sustainable, responsible business practices.

SEBI’s latest circular underscores the growing importance of credible ESG disclosures in India’s corporate landscape. By embracing these new mandates, businesses can enhance their ESG credibility, attract responsible investments, and contribute to India’s sustainable future.