SEBI Aims for Global ESG Standards in India
The Securities and Exchange Board of India (SEBI) is making strides towards aligning its Business Responsibility and Sustainability Reporting (BRSR) standards with internationally recognized environmental, social, and governance (ESG) norms. According to sources, the regulator has assembled a research team, which includes key players like the Shakti Sustainable Energy Foundation and auctusESG, to spearhead this initiative. This team has recently presented its findings to SEBI’s ESG Advisory Committee, pinpointing the gaps in the current BRSR framework. Their focus is on incorporating necessary additions and adjustments to bring the standards in line with the International Financial Reporting Standards (IFRS).
The push for this alignment comes on the heels of the International Organization of Securities Commissions (IOSCO) endorsing IFRS as the global standard for securities regulations. With SEBI being one of its 32 members, IOSCO has encouraged its 130 jurisdictions to adopt the International Sustainability Standards Board’s (ISSB) IFRS S1 and IFRS S2 standards, which have been in effect since January 2024. These standards outline the essential requirements for reporting sustainability-related financial information and climate change disclosures, setting the stage for a more comprehensive reporting framework.
### SEBI’s Evolution Towards Global ESG Standards
As SEBI moves towards aligning its BRSR framework with global ESG standards, the landscape of sustainability reporting in India is poised to undergo a significant transformation. The top 1000 listed companies by market capitalization will face more stringent disclosure requirements, encompassing detailed insights into sustainability risks, opportunities, impact assessments, benchmarking practices, and sector-specific targets. These disclosures, as per ISSB guidelines, will delve into the entity’s strategy, risk management approach, metrics, and targets related to sustainability risks and opportunities—areas that have been relatively underrepresented in the existing BRSR framework.
One notable addition that is under consideration is the disclosure of Scope 3 GHG emissions, which capture indirect greenhouse gas emissions originating from a company’s value chain. While this aspect is currently not addressed in the BRSR norms, discussions are underway to incorporate it into the revised framework. However, the overhaul process is anticipated to unfold gradually, with no definitive deadline in sight. As the research committee finalizes the proposed changes to the BRSR framework, the ESG Advisory Committee will meticulously review the modifications before they are presented to the SEBI Board for ultimate approval.
### The Road Ahead: Upholding Global Standards
The journey towards harmonizing India’s sustainability reporting practices with global ESG standards is a multifaceted endeavor that requires meticulous planning and strategic alignment. With ISSB offering a roadmap for the adoption of these standards by local jurisdictions, SEBI is poised to navigate this transition thoughtfully, in line with international best practices. Notably, IOSCO’s latest update indicates that approximately 56 jurisdictions have taken proactive steps to adopt ISSB’s standards, with half of them finalizing the adoption process—a testament to the global momentum surrounding sustainability reporting frameworks.
In conclusion, SEBI’s proactive stance in revamping its BRSR framework underscores the regulator’s commitment to fostering transparency, accountability, and sustainability in India’s corporate landscape. By embracing internationally recognized ESG norms, SEBI aims to elevate the country’s reporting standards to align with global benchmarks, setting a precedent for responsible business practices and long-term value creation. As stakeholders await further updates on the evolution of the BRSR framework, the underlying message is clear: sustainability is no longer a choice but a strategic imperative for businesses worldwide.
