SEBI’s Consultation Paper on BRSR Aims to Ease ESG Compliance

Posted by Written by Archana Rao Reading Time: 5 minutes

The Securities and Exchange Board of India (SEBI) has sought comments from the public and other stakeholders on the recommendations of the Expert Committee for facilitating ease of doing business with respect to the Business Responsibility and Sustainability Report (BRSR). 

The market regulatory body has given several suggestions to ease ESG (acronym for environmental, social, and governance) compliance and proposed disclosures pertaining to the ‘Green Credit Program’ by listed companies under the BRSR framework.

India is considering several proposed measures to relax the requirements for listed firms on environmental, social, and governance (ESG) disclosures. SEBI has invited public comments on a consultation paper that suggests requiring disclosures on ESG metrics for only those value chain partners—downstream and upstream—that together account for two percent or more of the listed company’s purchase or sales by value.

The value chain of listed entities will be classified into nine specific ESG attributes/key performance indicators (KPIs). The updated guidelines for environmental disclosures need confirmation on a number of topics, including waste management, water waste, consumption and treatment, and greenhouse gas emissions. Specifically for manufacturing organizations, this entails gathering ESG-related data at every stage of the purchase order and selling process.

The said recommendations, laid down by the expert committee on the BRSR core framework, if approved, can prove to be a big relief for the companies, giving them more time to collaborate with their value chain partners to achieve the standards. On May 22, 2024, SEBI came out with a consultation paper inviting comments on the recommendations, which is open until June 12, 2024.  The comments on the consultation paper can be submitted by interested stakeholders on SEBI’s website. The recommendation report features aspects of value chain reporting and the green credit program. 

Green Credit Program

In the federal budget for FY 2023–24, the central government proposed the Green Credit Programme (GCP) to be notified under the Environment (Protection) Act, 1986. This was launched to encourage behavioral change by incentivizing environmentally sustainable and responsive actions by companies, individuals, and local bodies and helping mobilize additional resources for these activities.

ESG responsibilities are becoming a higher priority for Indian companies. A number of businesses in the country have committed to deploying the BRSR Core framework, including Larsen & Toubro, Wipro, Infosys, and Tata Consultancy Services.

For example, in 2023, Infosys launched a development center in Nagpur, Maharashtra, that is dedicated to cloud and AI technology. According to media reports, the workplace complies with Infosys ESG criteria, ensures the highest standards for occupant efficiency and health, and employs cutting-edge technologies to minimize the use of natural resources like water and energy. The campus enables 100 percent wastewater recycling, smart building automation, effective rainwater harvesting, and low-energy cooling.

On June 26, 2023, India’s Ministry of Environment, Forestry, and Climate Change (MoEFCC) notified ‘draft Green Credit Programme Implementation Rules 2023’ for public comments. Earlier this year, on February 22, MoEFCC notified the methodology for the calculation of green credit with respect to tree plantations.

A listed company and its value chain partners can generate green credit through plantations of trees on waste or degraded lands and river catchment areas.

The committee, in its recommendation, has proposed that the following disclosure may be added as a leadership indicator under Principle 6 of BRSR, i.e., “Business should respect and make efforts to protect and restore the environment.”

Reviewing recommendations on value chain reporting

For the BRSR Core framework, in FY2024-25, the top 250 listed firms based on market value are required to provide ESG-related disclosures for each of their value chain partners, which together account for 75 percent of purchases or sales.

However, the committee, in its consultation paper, has recommended that ESG disclosures for value chain and third-party verification may be termed a ‘voluntary’ requirement rather than being required on a ‘comply-or-explain’ basis. This will allow corporations to have more time to inform their suppliers of the need, and value chain disclosures will be made gradually. 

Existing regulations on value chain reporting

SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations” or “LODR”) specify that annual report shall contain:

  • For the top 1000 listed entities based on market capitalization, a Business Responsibility and Sustainability Report on the environmental, social, and governance disclosures, in the format as may be specified by the Board from time to time.
  • Provided that the assurance of the Business Responsibility and Sustainability Report Core shall be obtained, with effect from and in the manner as may be specified by the Board from time to time.
  • Provided further that the listed entities shall also make disclosures and obtain assurance as per the Business Responsibility and Sustainability Report Core for their value chain, with effect from and in the manner as may be specified by the Board from time to time.
  • Provided further that the remaining listed entities, including the entities which have listed their specified securities on the SME Exchange, may voluntarily disclose the Business Responsibility and Sustainability Report or may voluntarily obtain the assurance of the Business Responsibility and Sustainability Report Core, for themselves or for their value chain, as the case may be.

Redefining the term ‘value chain’

The market regulatory body has also suggested an alternate approach that would apply the new two percent norm in addition to the current regulation, making disclosures for value chain participants even easier while maintaining coverage of important value chain participants.  

The upstream and downstream partners of a listed entity may be revised in the definition of value chain if they collectively account for at least 75 percent of the listed entity’s purchases and sales (by value) and individually account for two percent or more of those purchases and sales, respectively. This recommendation’s justification is to reduce the maximum number of upstream and downstream value chain partners from 50 (in the case of a two percent threshold) to 38 (in the case of two percent threshold with a 75 percent cut-off), allowing for more business ease while maintaining coverage of important value chain partners.

Easing ESG compliance in India

ESG refers to a set of measures and strategies adopted by organizations to minimzse adverse impacts and promote positive outcomes related to the environment, societal issues, and governance structure. BRSR Core is a restricted ESG disclosure requirement for listed firms that places a greater emphasis on data verifiability.

The said modifications, suggested by the expert committee, is in response to worries about the financial strain on smaller suppliers to publicly traded businesses and the time required to build up procedures and data systems for reporting and validating these disclosures.

The consultation report has suggested renaming “assurance” of ESG data to “assessment” as another measure to lessen the burden of compliance. It is assumed that because the proposed changes will eliminate the difficulties involved in conducting an audit of this data, the load and expense will be reduced. The strict standards for the value chain, which will affect hundreds of auxiliary businesses and outside parties, have alarmed firms.

The BRSR Core was adopted by SEBI in May 2021 as a successor to the Business Responsibility Report (BRR) for mainstreaming ESG in India. Several international reporting frameworks, including the Task Force on Climate-Related Financial Disclosures (TCFD), the Sustainability Accounting Standards Board (SASB), and the Global Reporting Initiative (GRI), have been cited in the BRSR framework.


SEBI is seeking public and stakeholder comments on the recommendations from the Expert Committee aimed at easing ESG compliance through the BRSR core framework. Key proposals include mandating disclosures for the ‘Green Credit Program’ and relaxing ESG disclosure requirements for value chain partners, impacting those accounting for at least two percent of a company’s transactions.

The recommendations suggest making ESG disclosures and third-party verifications voluntary rather than mandatory, which could alleviate the burden on companies and their suppliers. 

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