The evolution of Environmental, Social, and Governance (ESG) reporting requirements in India continues to advance, with the Securities and Exchange Board of India (SEBI) introducing significant updates to the Business Responsibility and Sustainability Reporting (BRSR) framework. This development builds upon earlier initiatives, such as those discussed in a March 2020 Thinking Legal article by Vaneesa Agrawal, an expertSEBI lawyer, which outlined SEBI's foundational mandate for monitoring ESG risks and opportunities.
"The journey of ESG compliance in India has been marked by progressive steps towards standardisation and comprehensive reporting," notes Vaneesa Agrawal, an expert SEBI lawyer, who has been following these developments closely. "The recent BRSR updates represent a significant milestone in this evolution."
Recent Developments in the BRSR Framework
SEBI's board meeting on December 18, 2024, marked a crucial turning point in ESG reporting requirements. The regulatory body, guided by Expert Committee recommendations, approved several key decisions regarding BRSR implementation. SEBI expert lawyers point out that these changes reflect a broader trend toward more stringent and standardised ESG oversight.
"The introduction of Industry Standards for BRSR Core reporting demonstrates SEBI's commitment to creating a more structured and comparable ESG reporting framework," emphasises Vaneesa Agrawal, a SEBI expert lawyer. "This standardization will significantly enhance the quality and consistency of ESG disclosures across different sectors."
Understanding the New Industry Standards
The Industry Standards, issued through a circular dated December 20, 2024, represent a comprehensive framework designed to streamline BRSR Core disclosures under the SEBI LODR Regulations. SEBI lawyers highlight that these standards introduce sector-specific metrics and reporting guidelines that address unique industry characteristics while maintaining cross-sector comparability.
Standardisation of reporting metrics
Enhanced comparability across industries
Improved transparency in ESG disclosures
Greater ease of implementation
The standards particularly emphasise quantitative metrics across environmental impact, social responsibility, and governance practices. "The new Industry Standards represent a crucial step towards harmonising ESG reporting practices," Vaneesa Agrawal explains. Expert SEBI lawyers also highlight that this standardisation will help companies better understand and meet their reporting obligations while providing investors with more consistent and comparable information."
SEBI expert lawyers note that the standards also include specific provisions for different company sizes and sector-specific considerations, ensuring that the reporting requirements remain practical and meaningful across various business contexts. The framework provides detailed templates and calculation methodologies, significantly reducing interpretation ambiguity and improving reporting consistency.
Historical Context and Evolution
The foundation for these developments was laid earlier, with SEBI mandating BRSR reporting for the top 1,000 listed entities under the LODR Regulations.SEBI expert lawyersobserve that the regulatory framework has evolved significantly since then, particularly with the July 2023 framework for disclosure and assurance requirements.
"The regulatory landscape for ESG reporting has become increasingly sophisticated. These developments reflect a growing recognition of the importance of sustainable business practices and transparent reporting."
- Vaneesa Agrawal, Thinking Legal
Implementation and Compliance Considerations
For companies subject to these requirements, SEBI lawyers suggest a systematic and phased implementation approach. The process begins with a comprehensive assessment of existing ESG reporting systems and the identification of gaps against the new requirements. Organisations must establish robust data collection mechanisms, implement appropriate internal controls, and develop verification processes to ensure the accuracy and reliability of reported information.
"Companies need to view these requirements not just as compliance obligations but as opportunities to strengthen their ESG frameworks," Vaneesa Agrawal, an expert SEBI lawyer emphasises. "The standardised approach will ultimately benefit both companies and stakeholders."
SEBI expert lawyers recommend that companies invest in appropriate technology infrastructure and training programs to support accurate and efficient reporting processes. They also stress the importance of establishing clear internal responsibilities and accountability mechanisms for ESG reporting.
The implementation timeline requires careful planning. SEBI lawyers note that companies should allocate sufficient resources for the initial setup, testing, and validation of their reporting systems. Regular internal audits and reviews are recommended to ensure ongoing compliance and continuous improvement of reporting processes.
Impact on Corporate Governance
SEBI expert lawyers note that these changes significantly impact corporate governance structures, requiring fundamental shifts in how organizations approach ESG oversight and accountability. The enhanced reporting requirements necessitate more robust internal controls and monitoring systems, with board-level involvement becoming increasingly critical. SEBI lawyers point out that companies are now expected to establish dedicated ESG committees or expand the scope of existing committees to oversee sustainability reporting and compliance.
As Vaneesa Agrawal observes, "The new framework encourages companies to integrate ESG considerations more deeply into their governance structures and decision-making processes." This integration extends beyond mere reporting compliance to influence strategic planning, risk management, and operational decisions. SEBI lawyers emphasise that companies must develop clear lines of responsibility and accountability for ESG performance, from the board level down to operational management.
The framework, as highlighted by SEBI lawyers, also necessitates enhanced stakeholder engagement and transparency in communication about ESG initiatives and performance. Companies are increasingly expected to demonstrate how ESG considerations influence their strategic decisions and risk management approaches, leading to more comprehensive and integrated corporate governance practices.
Future Outlook
The evolution of BRSR requirements signals SEBI's continued commitment to enhancing ESG reporting standards. SEBI lawyers anticipate that these changes will lead to the following:
More standardised reporting practices
Enhanced transparency in ESG disclosures
Better alignment with global reporting standards
Improved investor confidence in ESG data
"Looking ahead, we can expect further refinements to the BRSR framework as market practices evolve and stakeholder expectations continue to grow," Vaneesa Agrawal, a SEBI expert lawyer and founder of Thinking Legal notes in her concluding remarks.
Conclusion
SEBI lawyers emphasise that the recent updates to the BRSR framework represent a significant step forward in SEBI's ongoing efforts to strengthen ESG reporting requirements. SEBI expert lawyers and industry observers agree that these changes will contribute to more robust and standardised ESG reporting practices in India. As companies adapt to these new requirements, the focus on ESG factors in corporate reporting and governance is likely to intensify further.