14-May-2024-Special-Article

NAVIGATING INDIA’S TRANSITION TO SUSTAINABILITY REPORTING 

PwC India, a professional services network, recently released a report titled ‘Navigating India’s Transition to Sustainability’, focusing on sustainability efforts among leading Indian companies. 

The report analyzes how companies are adapting to the Business Responsibility and Sustainability Reporting (BRSR) disclosures mandated by the Securities and Exchange Board of India (SEBI), emphasizing Environmental, Social, and Governance (ESG) considerations. 

Key Findings of the Report 

• BRSR Disclosure Analysis: Despite being voluntary, 51% of India’s top 100 listed companies disclosed their data for the financial year ended March 2023. 
• Emission Reduction Efforts: 34% of companies have reduced their Scope 1 emissions (direct emissions) and 29% have reduced Scope 2 emissions (indirect emissions from purchased energy). 
• Life-Cycle Assessment: 44% of companies conducted life-cycle assessments of their products or services. 
• Renewable Energy Adoption: 49% of companies increased their energy consumption from renewable sources. 
• Net-Zero Targets: 31% of companies disclosed their net-zero targets, aligning with global efforts to achieve carbon neutrality. 
• Initiatives for Emission Reduction: Companies are adopting energy-efficient technologies, transitioning to renewable energy sources, purchasing carbon offsets, and entering into off-site power purchase agreements. 

Significance of the Report for India 

• Progress Towards Sustainability: The report highlights India’s journey towards sustainability, focusing on ESG considerations, and encourages companies to be accountable for their sustainability efforts. 
• Alignment with BRSR Framework: It aligns with the BRSR framework introduced by SEBI, promoting compliance and transparent disclosure among listed entities. 
• Enhanced Investor Confidence: Transparent reporting on sustainability enhances investor confidence and showcases India’s commitment to sustainable practices. 
• Global Competitiveness: Sustainable practices are becoming a competitive advantage globally, positioning India favourably in the international market. 
• Policy Insights: Policymakers can draw insights from the report to shape regulations and policies that promote sustainable practices, balancing economic development with environmental and social well-being. 

Initiatives for ESG Compliance in India 

• National Voluntary Guidelines (NVGs): In 2011, the Ministry of Corporate Affairs released the NVGs, defining ESG disclosure standards for businesses, marking an early step towards promoting responsible business conduct. 
• Business Responsibility Reports (BRR): SEBI introduced BRR in 2012, requiring the top 100 listed entities to include BRR in their annual reports. This was extended to the top 500 listed entities in 2015, promoting transparency and accountability. 

• Business Responsibility and Sustainability Report (BRSR): In 2021, SEBI replaced BRR with BRSR, seeking disclosures from listed entities on their performance against the nine principles of the National Guidelines on Responsible Business Conduct (NGBRCs), enhancing the scope and depth of reporting. 
• Adoption of Reporting Frameworks: Companies have the flexibility to use different reporting frameworks like the Global Reporting Initiative (GRI), Carbon Disclosure Project (CDP), and Sustainability Accounting Standards Board (SASB) to demonstrate their commitment to ESG practices. 
• Role of SEBI: SEBI, established in 1992, regulates and promotes the securities market in India, protecting investors’ interests. It plays a crucial role in enforcing ESG disclosure requirements and ensuring transparency and accountability in the corporate sector. 

Conclusion 

• PwC India’s report underscores the growing importance of sustainability initiatives among Indian companies, emphasizing ESG considerations and transparent reporting. 
• India’s progress towards sustainability aligns with global efforts to address environmental and social challenges while promoting economic growth. 
• Through initiatives like BRSR and adherence to reporting frameworks, Indian companies are enhancing accountability and investor confidence, contributing to a more sustainable future. 
• SEBI’s role in enforcing ESG disclosure requirements is pivotal in promoting transparency and responsible business conduct, ensuring that India’s corporate sector aligns with international best practices. 

Mains Question: 

1. “Discuss the role of Business Responsibility and Sustainability Reporting (BRSR) in shaping India’s transition towards sustainable practices, highlighting its significance for corporate governance and investor confidence.” (150 WORDS)