Introduction
ESG Reporting (Environmental, Social and Governance) is transforming how Indian businesses demonstrate sustainability and ethical practices.
Mandated by SEBI for the top 1,000 listed companies through the Business Responsibility and Sustainability Report (BRSR), ESG reporting in India aligns with global standards, attracting investors and ensuring compliance.
This guide answers “what is ESG reporting”, explores the BRSR framework and highlights its benefits for startups and corporates.
Whether you’re a startup seeking green funding or a business navigating global trade, understanding ESG reporting is key to long-term success.
What is ESG Reporting?
ESG reporting involves disclosing a company’s performance in three pillars:
- Environmental: Reducing carbon emissions, energy use and waste.
- Social: Promoting employee welfare, diversity and community engagement.
- Governance: Ensuring ethical conduct, transparency and board oversight.
In India, SEBI’s BRSR framework mandates standardized disclosures for listed companies, aligning with global frameworks like GRI and TCFD. It enhances investor trust and supports sustainable growth.
Example: Tata Steel’s 2023 BRSR report disclosed a 10% reduction in CO2 emissions, boosting investor confidence.
Evolution of ESG Reporting in India
- 2009: MCA’s Voluntary CSR Guidelines.
- 2011: National Voluntary Guidelines (NVGs) on Social, Environmental and Economic Responsibilities.
- 2012: SEBI mandates BRR for top 100 listed companies.
- 2016: BRR extended to top 500 companies.
- 2019: Revised NVGs as National Guidelines for Responsible Business Conduct (NGRBC).
- 2020: BRR mandatory for top 1,000 companies.
- 2021: BRSR introduced, voluntary for FY 2021–22.
- 2023: BRSR mandatory for top 1,000 companies; BRSR Core for top 150 (expanding to 250 by FY 2024–25).
SEBI’s BRSR Framework
Introduced under SEBI’s LODR Regulations, 2015, the BRSR framework ensures transparent ESG reporting for the top 1,000 listed companies by market capitalization from FY 2022–23. BRSR Core, a focused version, applies to the top 150 companies from FY 2023–24.
Key Disclosures:
- Environmental: Carbon emissions, water usage, waste management.
- Social: Workforce diversity, employee well-being, community initiatives.
- Governance: Board composition, executive pay, conflict management.
Formats:
- BRSR Comprehensive: Mandatory for large listed firms, covering detailed ESG metrics.
- BRSR Lite: Voluntary for SMEs and unlisted firms, with simplified indicators.
Case Study: A renewable energy startup used Novam Legal to prepare a BRSR Lite report, securing ₹5 crore in green funding.
BRSR’s Nine Principles
Aligned with NGRBC, the BRSR framework mandates reporting on:
- Ethical governance and transparency.
- Safe, sustainable products/services.
- Employee well-being and supply chain welfare.
- Stakeholder engagement.
- Human rights protection.
- Environmental conservation.
- Responsible public advocacy.
- Inclusive economic growth.
- Ethical consumer engagement.
Example: Reliance Industries reported on Principle 6 by investing ₹75,000 crore in renewable energy, aligning with India’s net-zero goals.
Why ESG Reporting is Critical for India
- Climate Change: India faces risks like rising sea levels and extreme weather. ESG drives renewable energy adoption (e.g., 20% of steel firms use solar, per CSE).
- Social Challenges: Addressing poverty and inequality through inclusive policies enhances societal impact.
- Governance: Transparent practices attract global investors, with 90% prioritizing ESG (EY 2023).
- Global Trade: The EU’s CBAM (effective January 2026, transitional phase from October 2023) imposes a 25% levy on carbon-intensive exports (e.g., steel, cement), costing India ₹4,000 crore annually (CSE).
Case Study: JSW Steel partnered with Novam Legal to adopt green energy, reducing CBAM penalties for EU exports.
Benefits of ESG Reporting
- Financial Performance: ESG-compliant firms see 10–15% higher valuations (Uniqus Consultech, 2024).
- Investor Trust: 84% of Indian firms voluntarily disclose ESG goals, attracting FDI (IMA India).
- Brand Loyalty: Sustainable practices boost customer and employee retention.
- Regulatory Compliance: Aligns with SEBI and MCA mandates, avoiding penalties.
- Global Competitiveness: Meets standards like GRI, SASB and SDGs for international markets.
Challenges and Solutions for ESG in India
- SME Adoption: Only 29% of SMEs have ESG goals (Uniqus, 2024). Solution: Adopt BRSR Lite for simplified reporting.
- Data Gaps: Limited emissions data delays reporting. Solution: Use AI tools like CarbonTrack for tracking.
- Costs: BRSR reporting costs ₹5–20 lakh. Solution: Partner with Novam Legal for cost-effective compliance.
- Greenwashing Risks: Overstated ESG claims harm credibility. Solution: Ensure third-party audits.
Legal Framework for ESG Reporting
- Companies Act, 2013: Section 135 mandates 2% CSR spending for companies with:
- Net worth ≥ ₹500 crore;
- Turnover ≥ ₹1,000 crore;
- Net profit ≥ ₹5 crore (in the preceding financial year).
- SEBI LODR Regulations, 2015: Mandates BRSR for top 1,000 listed firms.
- RBI Guidelines: Promote green financing and climate risk management.
Technology in ESG Reporting
- AI Tools: Platforms like CarbonTrack and Climatiq monitor emissions and energy use.
- Blockchain: Ensures transparent supply chain data, critical for BRSR Core’s 75% value chain reporting.
Conclusion
ESG reporting in India, driven by SEBI’s BRSR framework, is reshaping corporate sustainability.
From startups adopting BRSR Lite to listed firms meeting BRSR Core mandates, ESG reporting enhances investor trust, global competitiveness and regulatory compliance.
Novam Legal helps businesses navigate sustainability reporting, ensuring alignment with SEBI and MCA standards.
Ready to adopt ESG? Contact Novam Legal for expert BRSR compliance solutions.
Frequently Asked Questions
Q1. What is ESG reporting?
Ans1. ESG reporting discloses a company’s environmental, social and governance practices, ensuring transparency and sustainability, mandated in India by SEBI’s BRSR framework.
Q2. What is ESG reporting in India?
Ans2. In India, ESG reporting involves mandatory BRSR disclosures for the top 1,000 listed companies, covering carbon emissions, workforce diversity and governance metrics.
Q3. Is ESG reporting mandatory in India?
Ans3. Yes, SEBI mandates BRSR for the top 1,000 listed companies from FY 2022–23; BRSR Core applies to the top 150 from FY 2023–24.
Q4. What is the BRSR framework?
Ans4. SEBI’s Business Responsibility and Sustainability Report (BRSR) mandates standardized ESG disclosures, replacing BRR, for listed companies to align with global standards.
Q5. Which companies must file BRSR reports?
Ans5. Top 1,000 listed companies by market capitalization; smaller firms and SMEs can adopt BRSR Lite voluntarily.
Q6. What are the nine BRSR principles?
Ans6. Ethical governance, sustainable products, employee welfare, stakeholder engagement, human rights, environmental protection, responsible advocacy, inclusive growth and consumer ethics.
Q7. How does ESG benefit Indian businesses?
Ans7. Enhances valuations, attracts investors, ensures compliance and boosts brand loyalty, aligning with global standards like GRI and SDGs.
Q8. How does CBAM impact Indian exports?
Ans8. The EU’s CBAM (effective 2026) imposes a 25% levy on carbon-intensive exports, costing India ₹4,000 crore annually, pushing firms toward green energy.
Q9. What role does the Companies Act, 2013, play in ESG?
Ans9. Section 135 mandates 2% CSR spending for eligible firms, embedding social and environmental accountability in corporate governance.
Q10. How can startups adopt ESG reporting?
Ans10. Startups can use BRSR Lite, leverage AI tools for emissions tracking and partner with Novam Legal for cost-effective compliance.
