How will SEBI’s New Mandate affect Sustainability Reporting in India? Academike Explainer

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In the past few years, sustainability reporting in India has become an essential aspect of subsistence for companies that seek business opportunities. Further, the latest circular by the Securities and Exchange Board of India reignited the debate on the implication of the new sustainability reporting format, which will apply to 1000 listed companies by marker-capitalisation. Debarati Pal and Dipendu Das analyse the circular and explain the impact and history of sustainability reporting in India.

Sustainability Reporting in India

By Debarati Pal and Dipendu Das. Debarati and Dipendu are students at the National University of Study and Research in Law, Ranchi, Jharkhand.


In recent decades, individuals have started questioning how companies impact the environment, demanding that corporations, manufacturers and factories be transparent regarding their operations. Further, even investors have become conscious that society and the environment are integral aspects of the stakeholder’s chain. Therefore, companies are required to report an overview of their environmental, social and governance (ESG) operation and its financial implications.[1] This disclosure is often referred to as sustainability reporting.

Sustainability reporting in India has become a mainstream activity for some time now. From voluntary to mandatory Sustainability reporting, India has moved beyond commercial exchange to hold companies accountable.

This year India took an advance step towards the same. On May 10, 2021, the Securities and Exchange Board of India (SEBI) released a circular informing the new disclosure norms on sustainability that will apply to the top 1000 listed entities. This circular introduced the format for Business Responsibility and Sustainability Report (BRSR). The BRSR, as suggested in the circular, is a ‘departure’ from the earlier used ‘Business Responsibility Report’ (BRR).

The objective of the new format is to ensure sustainability reporting is at par with financial reporting and help companies make better sustainable investment choices based on quantifiable metrics. It requires companies to report on details such as water and energy usage, greenhouse and air pollutant emissions, waste generated and their disposal practices, biodiversity, adaptation to the circular economy, and other environment-related aspects should. SEBI has made the new reporting format mandatory for all FY23 and optional for FY22.[2]

The article will now provide a brief history of sustainability reporting in India. Next, it will explain the recommendations from across industries that have responded to the new format. Finally, it will talk about essential legislations in India that need changing or are in tune with the SEBI format.

The History of Sustainability Reporting in India

In 2009, the Ministry of Corporate Affairs (MCA) issued guidelines to make social responsibility for companies more mainstream.

Later in 2011, the MCA issued National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVG). As a result, companies were required to take action to accomplish sustainable growth and economic development, these were later incorporated in the Companies Act, 2013.

While in the beginning, these Guidelines were only a voluntary initiative that companies had to take up. However, through a circular in 2012, the Securities and Exchange Board of India (SEBI) directed 100 listed companies to submit a Business Responsibility Report (BRR) attached along with their Annual Report.

Later, the BRR was mandated to the top 100 listed entities based on market capitalisation, and this was initiated through the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. In the same year, BBR was made applicable to 500 listed entities by amendment of the regulation.[3]

Recommendations on Speculated Impact of Sustainable Environment Reporting

After the NVGs were updated, they were called National Guidelines on Responsible Bussiness Conduct (RBC Guidelines). The revision was long overdue to include ‘national and international developments in the sustainable development agenda and business responsibility’.

These Guidelines were based on practices and guidelines provided by international standards such as the Paris Agreement, UN Sustainable Development Goals, UN Guiding Principles on Business and Human Rights and ILO Core Conventions. They are relevant since the new BRSR format is based on the nine principles mentioned under RBC Guidelines, which also provides disclosure on the sustainable environment under Principle 6.

The reporting under each principle is divided into ‘essential’ indicators, which need mandatory reporting, and ‘leadership’ indicators, which require voluntary reporting.[4]

SEBI conducted various discussions regarding implementing the BRSR format, inviting opinions and inputs of investors and stakeholders. These discussions showed that a uniform reporting requirement would not be realistic as the businesses across industries vary. For instance, considering that the pharma industry is not a continuous process industry, it cannot report water usage and waste management yearly as the numbers would differ. Therefore, it was recommended that rather than saltwater, freshwater usage should be disclosed by chemical companies.  Further, the social ecosystem of the locality should be mainly deliberated when it comes to the textile industry.[5]

It was also suggested that the reporting should be based on carbon emission and lifecycle analysis. Simultaneously, standards not be set for energy utilisation as consumption also varies from industry to industry.

The 2021 format mandated sectors like power, aviation, and auto to report greenhouse gas emissions, such as nitrogen oxide and sulphur oxide. And to put the aviation sector through watchful consultation as it is already subject to regulation by international bodies.[6] It has been suggested that show-cause notices should be applicable only in case of violations.[7]

There are three categories of emissions classified depending on their scope and to classify their impact. For instance, Direct emissions from owned or controlled resources are classified as scope 1 emissions. Subsequently, indirect emissions from the generation of purchased heating, cooling, steaming etc., are classified as scope 2 emissions. While the two types above of emissions can be reported easily, monitoring scope 3 emissions that transpire in a company’s value chain has proven much harder. Therefore, it was recommended that scope 1 and 2 emissions be mandatory for companies to report and only subject scope 3 emissions to the management level of companies that intend to strive for greater environmental, social and ethical governance responsibility.

Additionally, the suggestions went as far as to mandate reporting of nitrogen oxide and sulphur oxide only to companies spewing high emissions. Furthermore, the report should be introduced at the management or ‘leadership’ level before subtle compliance by the essential levels. In conclusion, based on the greater interest and feasibility, discussions around the implementation of the report advised that the optional applicability of BRSR be extended for two years.[8]

Legislations related to Sustainable Environment Reporting

The BRSR is looking to smoothly align itself with the ESG and the prevalent legislation for efficient implementation. Article 51A(g) (Part IV A) of the Indian Constitution projects a duty on all citizens to protect and facilitate the natural environment, forests, lakes, rivers and wildlife. Granted that a company is not considered a citizen, it is still a group of citizens. Therefore, they are equally obliged to take steps that work towards protecting and restoring the environment.

The company must take initiatives to avoid greenhouse gas emissions that diminish the carbon levels in the atmosphere and ultimately hamper global warming. It is encouraged that companies voluntarily kickstart initiates as there is no legislation pushing to lower India’s carbon economy.[9] On the other hand, there are several legislations to manage waste emission in India. These include the National Green Tribunal Act (2010), Environment Protection Act (1986), Air (Prevention and Control of Pollution) Act (1981), Water (Prevention and Control of Pollution) Act (1974) and Hazardous Waste Management Regulations.

Reporting requirements on the topic of waste are laid down in GRI 306, which are global standards for sustainability reporting. Guidelines and recommendations related to waste are disclosed in this comprehensive document.[10] It requires the management to provide an overview of the causes of waste and its subsequent impact on its surroundings. The report should also include the company’s initiatives or plans on taking to curb these impacts. All the information should be structured, providing details of the quantity of waste produced and its composition and management.[11]

As per the United Nations Environment Programme (UNEP), the likely impact on the environment from a project or development can be assessed and evaluated by considering the implications of correlated socio-economics, culture and health, both favourable and unfavourable. This process is called the Environmental Impact Assessment (EIA), backed by the Environment Protection Act, 1986. The Environment Impact Assessment Notification, 2006 has sorted the headway projects cleared for environmental protection and restoration purposes.

The projects are decentralised in national-level assessments as Category A and state-level assessments as Category B. With EIA, the time and cost it takes to implement a project can be reduced, management and cleaning up of waste can be made more efficient, and compliance with laws and regulations can be updated.[12]


As the regulators hoped, this format serves as a primary source for assessing a business through its non-fictional disclosures. These disclosures have now been taken under the umbrella social and environmental responsibilities that a company has. The hope is that banks, credit rating agencies and other financial institutions will now find sustainability disclosures useful, and the financial disclosure will help ascertain their credibility.[13]

However, as seen through the recommendations, this format will take a minute to catch up as it’s not an easy task to instil sustainable behaviour within a company. While companies will be obligated to comply with these formats, certain disclosures like ‘low carbon economy’ lack legislation. Therefore, companies will also have to ensure voluntary sustainability initiatives when looking at commercial or business profits.


[1] SEBI’s Sustainability Reporting Norms Mandate ESG Overview, The Hindu (May 11, 2021),

[2] SEBI Makes BRSR Applicable to Top 1000 Listed Companies, India CSR (2021),

[3] Manoj Tiwari, From BRR to BRSR: Road Ahead For Sustainability Reporting By Businesses, Tax Guru (2020),

[4] SEBI Comes Out With Disclosure Requirements Under Business Responsibility and Sustainability Report, The Economic Times (May 11, 2021), report/amp_articleshow/82533681.cms.

[5] Sunil Sanghai, How BRSR Reporting Standards Are Likely To Look Like For India, The Economic Times (Jan 18, 2021),

[6] Manesh Samtani, SEBI Enhances Sustainability Reporting Rules for Listed Entities, Regulation Asia (May 13, 2021),

[7] Sunil Sanghai, How BRSR Reporting Standards Are Likely To Look Like For India, The Economic Times (Jan 18, 2021),

[8] Supra Note 3.

[9] Mayer Brown, India Imposes New ESG Reporting Requirements on Top 1000 Listed Companies, Mondaq (Jun 10, 2021),

[10] Abhishek Saraf, BRSR Reporting: Actions and Disclosures Required for Business Sustainability, Vinod Kothari (Jun 8, 2021), .

[11] Supra Note 7.

[12] Supra Note 8.

[13] Business Responsibility and Sustainable Report, Deloitte



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