Transition to Sustainable Economies

Economies where people and the ecosystem both thrive has emerged as national ambitions globally, including India

- MINIYA CHATTERJI

IN THE PAST YEAR, regulatory pressures have pushed companies to gather deeper and a more expanded range of sustainability data. In March 2021 it became mandatory for all European Union investment firms and non-European firms marketing themselves in Europe to include Environment-Social-Government (ESG) factors in their investment decisions.

The Canadian Transition Taxonomy followed and so did the new climate change disclosure rules by the US Securities and Exchange Commission on March 21, 2022. Indeed, transitioning to sustainable economies where people and the ecosystem both thrive has emerged as national ambitions globally, including India.

On May 10, 2021, the Securities and Exchange Board of India also issued a circular implementing new sustainability-related reporting requirements for the top 1,000 listed companies by market capitalisation. In order to give time to companies to adapt to the new requirements, the new reporting requirements would be on voluntary basis for FY2021-22 and on a mandatory basis starting FY2022-23.These new disclosure needs to be made in the format of the Business Responsibility and Sustainability Report (BRSR), which is a major step-up in sustainability data requirements from SEBI’s earlier Business Responsibility Report.

Notably, the new BRSR disclosures include Scope 1 (direct GHG emissions) and Scope 2 GHG emissions (GHG emissions resulting from purchased power) as well as leadership indicators on Scope 3 GHG emissions (GHG emissions produced by the supply chain). The latter thus also indirectly puts pressure on small and medium sized companies in India which are often included in the supply chain of the 1,000 largest listed companies.