In a move aimed at easing the burden on businesses and promoting sustainable practices, the Securities and Exchange Board of India (SEBI) has introduced measures to revise and streamline ESG (Environmental, Social, and Governance) reporting requirements. The changes focus on value chain disclosures and, notably, the introduction of voluntary disclosures on green credits, incentivizing environmentally friendly initiatives.
SEBI has introduced a framework for disclosing green credits, encouraging listed entities to report the number of green credits generated or procured. This disclosure extends not only to the entity itself but also to its top ten value chain partners, based on purchase and sales value. This initiative aims to promote transparency and recognize companies actively contributing to environmental sustainability. Disclosure on green credits has been included as a new leadership indicator within the Business Responsibility and Sustainability Reporting (BRSR) framework.
The revisions offer companies the option to undertake ‘assessment’ or ‘assurance’ for Business Responsibility and Sustainability Reporting (BRSR) Core and ESG disclosures for their value chain, further enhancing the credibility of their sustainability efforts.
These amendments were formalized through revisions to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The changes also bring partial modifications to the Master Circular for compliance with SEBI’s Listing Obligations and Disclosure Requirements.
The decision to revise provisions regarding ESG disclosures for the value chain was made on December 18, 2024, based on the recommendations of an Expert Committee for Facilitating Ease of Doing Business and following public consultation. This initiative has now culminated in the formal implementation of revised guidelines.
SEBI has also addressed the applicability and assessment of BRSR Core, emphasizing the facilitation of business and reduction of compliance costs. The provisions are applicable for BRSR disclosures starting from the financial year 2024-25. The circular outlines a phased approach for mandatory assessment or assurance of the BRSR Core, based on market capitalization. Starting with the top 150 listed entities in FY 2023-24, the requirement will gradually extend to the top 1000 listed entities by FY 2026-27.
In a move to support smaller businesses and reduce compliance burdens, SEBI has now formally deferred the disclosure and assessment requirements for the value chain by one year. Additionally, the threshold for value chain partners has been revised. Disclosures for the value chain will be applicable to the top 250 listed entities on a voluntary basis from FY 2025-26, with assessment or assurance of these disclosures also being voluntary from FY 2026-27.
SEBI’s latest measures reflect a strategic effort to balance regulatory requirements with the practical considerations of businesses, fostering a more sustainable and transparent corporate ecosystem in India.
