Environmental, Social, and Governance Compliance in India: New Reporting Requirements

Posted by Written by Atishay Bhatia Reading Time: 6 minutes

India has introduced new environment, social, and governance (ESG) reporting requirements for the top 1,000 listed companies in the country by market capitalization. The Securities and Exchange Board of India (SEBI) stipulates that the disclosure must be made through a new format, namely the Business Responsibility and Sustainability Report (BRSR). BRSR reporting has been made voluntary for FY 2021-22 but will be mandatory from FY 2022-23.

Sustainability is fast becoming a key priority for corporates around the world, both linked to their company branding strategy as well as expectations of their shareholders. The modern business firm is now tasked with being more than a profit-driven, revenue-generating machine.

Businesses today are expected to have an extra layer of ethics and moral duty towards the society. There has been a corresponding shift in the mindset of investors, with priorities expanding to include sustainable growth along with the primary goal of wealth creation. Boardrooms have taken note of this and have started embedding practices to ensure that these requirements are met.

Companies and organizations have started preparing sustainability reports disclosing their performance on environmental, social, governance parameters as a part of reporting non-financial performance metrics. While the Indian government has not mandated all companies to prepare these reports, it is strongly encouraged as such monitoring and accountability provides clarity to investors and other stakeholders about the company’s responsible conduct of activities.

How does India view ESG compliance?

In 2013, India became the first country to mandate corporate social responsibility with the Companies Act of 2013. This tenet was previously suggested in the National Voluntary Guidelines (NVGs) on Social, Environmental and Economic Responsibilities of Business released in 2011 before being included in the Companies Act 2013.

Additionally, the top 500 listed firms in India by market-cap were instructed by SEBI to disclose indicators of business responsibility and sustainability through Business Responsibility Reporting (BRR).

SEBI in India plays the role of market regulator, regulating securities, and protecting the interests of the stakeholders in the market. SEBI is also responsible for the implementation of an efficient ESG policy mechanism.

In 2021, SEBI issued a circular containing details of a new sustainability-related reporting requirements called the Business Responsibility and Sustainability Report (BRSR), which brings India’s sustainability reporting to global reporting standards. BRSR is a departure from the BRR format.

What are the disclosure requirements under India’s new ESG policy?

On May 10, 2021, SEBI issued a circular introducing the Business Responsibility and Sustainability Report (BRSR), which will replace the Business Responsibility Reporting (BRR). The new reporting format outlines mandatory ESG policies and requirements for the top 1000 listed companies by market capitalization. The format is based on the nine principles stipulated in the “National Guidelines on Responsible Business Conduct” (RBC Guidelines).

The RBC Guidelines are influenced by leading international standards, including the UN Guiding Principles on Business and Human Rights, UN Sustainable Development Goals, Paris Agreement, and International Labour Organisation (ILO) Core Conventions. The RBC Guidelines addresses key sustainability matters, such as business ethics and transparency, human rights, environmental safety, and fair labor practices.

The reporting format is mandatory from FY 2022-23 but is voluntary for FY 2021-22. This is to provide companies with sufficient time to adapt to the new reporting compliance. Companies are encouraged, however, to adopt the BRSR early.

The BRSR is aimed at securing transparent and standardized disclosures by companies on their ESG parameters and sustainability-related risks. This approach is expected to help companies better demonstrate their sustainability objectives, position, and performance to the market, resulting in long-term value creation and increasing the ability of investors to make informed ESG-related decisions.

Business Responsibility and Sustainability Reporting in India


Disclosure requirements



a) Overview of the company’s material environmental, social, and corporate governance risks and opportunities and approach to mitigate or adapt to these ESG risks as well as relevant financial implications

b) Sustainability related goals and targets and related performance

c) Management structures, policies, and processes related to sustainability

General management and process disclosures


a) Resource usage (energy and water) and intensity metrics

b) Air pollutant emissions

c) Greenhouse gas emissions (Scope 1, Scope 2, and Scope 3)

d) Waste generated and waste management practices

e) Impact on biodiversity

Principle 6: Businesses should respect and make efforts to protect and restore the environment.



a) Gender and social diversity, including measures for differently abled employees

b) Turnover rates

c) Median wages

d) Welfare benefits to permanent and contractual employees

e) Occupational health and safety

f) Trainings

Principle 3: Businesses should respect and promote the well-being of all employees, including those in their value chains.


Principle 5: Businesses should respect and promote human rights.


a) Social impact assessments

b) Rehabilitation and resettlement

c) Corporate social responsibility

Principle 8: Businesses should promote inclusive growth and equitable development.


a) Product labelling

b) Product recall

c) Consumer complaints with respect to data privacy, cyber security, etc.

Principle 9: Businesses should engage with and provide value to their consumers in a responsible manner.


a) Training on the principles stipulated in the “National Guidelines on Responsible Business Conduct” (RBC Guidelines) for members of the Board, senior managers, and employees

b) Anti-corruption and anti-bribery policies

c) Awareness programs conducted for value chain partners on the principles in the RBC Guidelines

Principle 1: Businesses should conduct and govern themselves with integrity, and in a manner that is ethical, transparent and accountable.

Source: Mayer Brown

How big Indian companies are adapting to the ESG pivot

Many leading companies in India have begun to include environmental, social, and governance targets as a part of key result areas (KRAs) for top management when computing their variable pay. 

The move is influenced by an increasing push from investors to allocate capital that not only generate financial returns but are also invested in social good. Overall, non-financial factors are increasingly become a marker of material risks and growth opportunities for investors.

The pandemic and increasingly evident costs of climate change have elevated the importance of these discussions, with many boards devoting significant time in their strategy meetings to discuss ESG issues.

ESG consciousness among corporates in India: Leading examples

  • For consumer goods maker Marico, ESG is now become a part of top management KRAs.
  • Diversified miner Vedanta is currently planning to embed ESG into every aspect of the company’s decision-making and performance evaluation.
  • Tata Group companies, such as Tata Steel, Tata Motors, Tata Consumer, Tata Power, and Tata Consultancy Services (TCS) look at ESG as a priority. Their top management claims that sustainability is among the top four business objectives for the organization.  
  • Early-stage venture capital investors are keen to support start-ups that actively facilitate ESG goals.
  • Textile major, Welspun, has also embarked on a journey to enable a sustainable approach in all its operations. Environmental and social concerns are making modern consumers more cautious of their fashion and textile choices leading brands to be more conscious of whether their ESG parameters are being optimally met.
  • Prominent Indian companies like Tech Mahindra, Infosys, and Wipro are part of the Dow Jones Sustainability Index (DJSI), which assesses the ESG performance of companies globally. Historically, the companies that are part of the DJSI follow ESG best practices and have fared well on the Indian bourses. This may be attributed to the fact that investors, both institutional and retail, wish to invest in companies seen to be more socially responsible.
  • Blue-chips stock, such as TCS and Reliance Industries, recently announced roadmaps towards reduction in greenhouse gas emissions towards zero. Investors seem to have an appetite for innovative instruments to finance environmental and social initiatives.

How India compares with other countries

Being the first country to have mandated corporate social responsibility, India has for some time taken the lead in demanding ethical commitments from businesses. However, different countries have different approaches and beliefs when it comes to ensuring responsible business activity.  

The United Kingdom

In the UK, quoted companies are mandated to provide a report disclosing annual greenhouse gas emissions, diversity, and human rights under the Companies Act 2006 (Strategic and Director’s Report) Regulations, 2013. Companies with a premium listing of equity shares in the UK also need to report on how they apply the main principles of the Corporate Governance Code, 2012.

European Union

The European Commission (EC) Directive on Disclosure of Non-Financial and Diversity Information (2013) is considered a major reporting instrument of the EU. It requires certain large companies and public-interest companies to disclose material environmental, social, and employee-related matters.

United States

According to the Regulation issued by the US Securities and Exchange Commission (SEC), all listed companies should disclose their environmental compliance expenses. Another sustainability reporting instrument by the New York Stock Exchange (NYSE) mandates that listed companies adopt and disclose a code of business conduct and ethics.


Overall, China has seven regulations that act as instruments of mandatory disclosure on sustainability matters. The Environmental Information Disclosure Act, 2008 mandates corporations to disclose environmental information. Annual resource utilization, pollution levels, waste generation, disposal method, and some other aspects can be disclosed voluntarily to gain more rights to grants and public support. A separate report with an environmental disclosure is also requested from large companies listed on the Shanghai Stock Exchange.

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