India Enhances ESG Reporting Framework with Green Credit Disclosures

MUMBAI, April 1, 2025 – In a significant move to facilitate ease of doing business while reinforcing sustainability reporting, the Securities and Exchange Board of India (SEBI) has revised its Environmental, Social, and Governance (ESG) disclosure norms. The amendments, notified through the latest gazette publication, introduce flexibility in assurance and assessment mechanisms, extend compliance timelines for value chain disclosures, and incorporate voluntary reporting on green credits.

The revised framework aligns with recommendations from an expert committee and follows extensive public consultation. The key amendments focus on three main areas: the framework for assurance or assessment, ESG disclosures for value chains, and the voluntary disclosure of green credits.

Introduction of Green Credit Reporting

A notable addition to the Business Responsibility and Sustainability Reporting (BRSR) framework is the requirement for companies to disclose green credits generated or procured. As per Principle 6 of the BRSR, listed entities must report the green credits obtained both by themselves and by their top ten value chain partners in terms of purchases and sales. This provision will be applicable from the financial year (FY) 2024-25 onwards, marking a step towards incentivising sustainable business practices.

Flexibility in ESG Assurance and Assessment

In a bid to reduce compliance burdens and ensure a cost-effective verification process, SEBI has provided companies with the option to choose between ‘assessment’ or ‘assurance’ for the BRSR Core and value chain ESG disclosures.

Assessment will involve third-party verification based on standards developed by the Industry Standards Forum (ISF) in consultation with SEBI. The new methodology integrates additional key performance indicators (KPIs) relevant to the Indian and emerging market contexts, including job creation in small towns, business openness, and gender wage parity. Furthermore, global comparability is enhanced through intensity ratios adjusted for Purchasing Power Parity (PPP).

The glide path for mandatory assessment or assurance will be implemented in phases, starting with the top 150 listed entities in FY 2023-24, gradually expanding to the top 1,000 by FY 2026-27.

Revised ESG Disclosures for Value Chains

Recognising the challenges faced by businesses in measuring and reporting value chain sustainability data, SEBI has deferred the implementation of ESG disclosures for value chain partners by one year. To mitigate compliance costs, the revised framework narrows the definition of ‘value chain partners’ to those contributing at least 2% of a company’s total purchases or sales. Companies will also have the option to limit disclosures to 75% of their total transaction values.

From FY 2025-26, the top 250 listed companies will be encouraged to voluntarily disclose ESG data for their value chains. The mandatory assessment or assurance of such disclosures will be introduced on a voluntary basis from FY 2026-27, ensuring businesses have adequate time to establish robust reporting mechanisms.

Strengthening Governance and Independence of Assurance Providers

To ensure credibility and avoid conflicts of interest, SEBI has introduced governance guidelines for assessment and assurance providers. Listed entities must appoint providers with recognised expertise while ensuring they maintain independence. Notably, assurance providers and their affiliates are prohibited from offering consulting or non-audit services to the companies they assess.

Additionally, companies must disclose the name of the assessment or assurance provider and specify the type of assurance obtained in their annual reports.

Gradual Implementation for Seamless Transition

Acknowledging the complexities involved in ESG data collection and verification, SEBI’s revised framework provides companies with ample time for compliance. In the first year of reporting ESG disclosures for value chains, providing comparative data from the previous year will remain voluntary. Moreover, listed entities opting to disclose value chain ESG data must specify the percentage of their total sales and purchases covered.

Regulatory Oversight and Industry Impact

The amendments, issued under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, take immediate effect unless specified otherwise. Stock exchanges have been directed to notify listed entities of these changes and ensure compliance.

Industry experts view these reforms as a progressive step towards improving ESG transparency while balancing regulatory requirements with business feasibility. By streamlining disclosure obligations and offering flexible compliance pathways, SEBI aims to foster a more inclusive and practical approach to sustainable corporate governance.