SEBI recently proposed a regulatory framework on ESG disclosures by listed entities, ESG ratings in the securities market and ESG investing by mutual funds in order to facilitate balance between transparency, simplification and ease of doing business in an evolving domain. This comes amid growing recognition of the significant economic and financial impact of climate change and environmental, social and governance (ESG) risks. 

SEBI has mandated the top 1,000 listed companies by market capitalisation to make filings as per the Business Responsibility and Sustainability Reporting (BRSR) from FY23. In FY22, more than 175 companies reported on the BRSR framework on a voluntary basis. 

SEBI in May 2022, constituted the ESG Advisory Committee (“EAC / Committee”) to make recommendations to streamline the regulatory framework for ESG Disclosures, ESG Ratings and ESG Investing. This Consultation Paper is based on the recommendations of the EAC and internal deliberations. 

As per SEBI, In order to achieve the twin objectives of improving credibility and limiting the cost of compliance, BRSR Core has been developed for reasonable assurance which consists of select Key Performance Indicators (KPIs) under each E, S and G areas that needs to be reasonably assured. The BRSR Core framework also specifies the methodology to facilitate reporting by corporates and verification of the reported data by an assurance provider. The comprehensive BRSR should be updated to incorporate KPIs proposed in BRSR Core that are currently not present in the comprehensive BRSR. Also, the regulator has proposed ESG parameters that could be relevant to Indian context that may be integrated in at least one of the ESG ratings for an Indian company.

Comments may be submitted by March 06, 2023.

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