Making disclosures effective

Environmental, social and governance disclosure norms have gaps that need to be filled, say Aparna Ravi, Kinnari Sanghvi and Shuchita Goel

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Regulatory initiatives to build the legal frameworks around environmental, social and governance disclosures in India, while nascent, are not of recent origin. Various regulators have gradually introduced requirements aimed at enhancing transparency and fostering corporate responsibility. This article examines these evolving ESG disclosure frameworks as implemented by the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), and the International Financial Services Centres Authority (IFSCA). It further analyzes the regulatory gaps that these initiatives seek to fill, and proposes solutions to enhance these frameworks.

SEBI Mandates

SEBI introduced a set of expansive ESG reporting requirements for certain listed entities titled the 'Business Responsibility and Sustainability Report', in 2021, which were later consolidated and supplemented in 2023. These are mandatorily applicable for the top 1,000 listed entities by market capitalization (including both companies and financial institutions), while other listed entities may report voluntarily. These entities must disclose essential indicators such as sustainable sourcing, energy consumption, and Scope 1 and 2 greenhouse gas emissions, with certain leadership indicators like Scope 3 emissions and environmental/social risks reported voluntarily.