By Nilay Mishra , with inputs from Aastha Mathur, in collaboration with Hooop.in
1. Introduction
In May 2021, the Securities and Exchange Board of India (“SEBI”) introduced the Business Responsibility and Sustainability Reporting (“BRSR”) framework. As the first mandatory Environmental, Social and Governance (“ESG”) disclosure framework in India, BRSR prioritises transparency, accountability, and sustainable business practices.
This article provides an overview of the BRSR framework, its relevance and shortcomings, along with a comparative analysis with similar rules in other jurisdictions.
2. Evolution of Non-Financial Reporting in India
2.1 India’s move towards a formalised ESG reporting regime started with the introduction of National Voluntary Guidelines (“NVGs”) by the Ministry of Corporate Affairs (“MCA”) in 2011. This prompted SEBI to direct the top 100 listed companies to submit a Business Responsibility Report (“BRR”) in 2012, later extended to the top 1,000 companies in 2019.[1] BRR, however, was plagued with inconsistencies and lacked uniform metrics. Further, the framework was focused on economic accountability rather than on ESG disclosures.
2.2 This prompted SEBI to replace BRR with the BRSR framework in May 2021. BRSR was further strengthened in 2023 when SEBI introduced the “BRSR Core,” a subset of BRSR consisting of a set of “Key Performance Indicators,” relevant to the Indian market. These included aspects like job creation in small towns, openness of business, gross wages paid to women, etc. BRSR Core mandates third-party reasonable assurance for specified ESG indicators from FY 2023–24 onwards for the top 150 listed companies which will be extended to cover the top 1000 listed companies by FY 2026-27. Disclosures must specify whether data is “assured,” i.e., verified by a third party, name of the assurance provider, and standard applied. Companies must either comply with this requirement or provide reasons for non-compliance.
2.3 In December 2024, SEBI issued two circulars introducing (i) Value Chain Disclosures and (ii) Industry Standards on Reporting. Value Chain Disclosures refer to ESG reporting for partners accounting for over 2% of the reporting entity’s purchases or sales. These disclosures also replaced the word “assurance” with “assessment or assurance,” indicating a shift towards mandatory third-party assessments. Disclosures related to green credits were also introduced. The Industry Standards on Reporting, developed by the Association of Chambers of Commerce and Industry of India, FICCI, and CII, supplement SEBI’s reporting format. These standards introduced several new concepts, including a spend-based approach to estimating environmental footprint and disclosures on the number of cyber incidents and related reporting to CERT-In.
3. Features of the BRSR Framework
3.1 The BRSR framework consists of three major sections, (a) General Disclosures: basic details (CIN, address, etc.) along with data on the company’s business activities and employees, (b) Management and Process Disclosures: information on policies, governance, stakeholder management, and risk management, and (c) Principle-wise Performance Disclosure: data on the company’s overall performance with respect to the principles laid down by MCA under National Guidelines on Responsible Business Conduct (“NGRBC”).[2]
3.2 Each principle is accompanied by a list of “Essential Indicators,” i.e., mandatory disclosures surrounding the core ESG indicators and “Leadership Indicators,” i.e., disclosures that are voluntary and indicate the company’s commitment to a higher standard of sustainability. For reporting on emissions, companies are required to mandatorily disclose Scope 1[3] and Scope 2[4] emissions, while Scope 3[5] emissions are voluntary.
3.3 The BRSR itself does not prescribe explicit penalties for non-compliance. However, Section 15HB of the SEBI Act, 1992 allows SEBI to impose a penalty of up to INR 1 crore or about USD 11,650 for any failure to comply with its rules, regulations, or directions, including BRSR. This gives SEBI discretion to penalise non-compliance, though the absence of defined thresholds or enforcement mechanisms within the BRSR weakens its deterrent effect in practice.
4. Comparative Analysis between BRSR, SFDR and SEC Rules
4.1 Growing awareness of the importance of sustainable development has led many jurisdictions to align corporate responsibility frameworks with global standards like the United Nations’ Sustainable Development Goals (“SDG”)[6], UN Global Compact, and/or Global Reporting Initiative (“GRI”) Standards.[7] EU’s Sustainable Finance Disclosure Regulation (“SFDR”) and the US Securities and Exchange Commission’s Climate-Related Disclosure Rules (“SEC Rules”) are two key frameworks that often set the standard for other countries. While India’s BRSR also aims to enhance ESG accountability, key differences in scope, materiality, and disclosure requirements distinguish it from the EU and US approaches.
| # | Point of Comparison | BRSR (India) | SFDR (EU) | SEC Rules (US)[8] |
|---|---|---|---|---|
| 1 | Applicability | Top 1,000 listed companies in India by market capitalisation. | Financial market participants include asset managers, investment firms and financial advisors. | All publicly listed companies; with enhanced requirements for Accelerated Filers (“AFs”) and Large Accelerated Filers (“LAFs”).)[9] |
| 2 | Scope of ESG Reporting | Covers a wide range of ESG aspects aligned with national sustainability objectives. | Focuses on sustainability characteristics and risks of financial products while also requiring corporate-level ESG disclosures from financial market participants and their investment decisions.[10] | Primarily targets disclosure of climate-related financial risks and governance aspects of climate risk management to inform investor decisions, with a focus on environmental aspects. |
| 3 | Emissions Disclosure Requirements | Mandates disclosure of Scope 1 and Scope 2 greenhouse gas emissions; Scope 3 remains voluntary. | Requires mandatory disclosure of Scope 1, 2, and 3 emissions, along with Principal Adverse Impact (“PAI”) indicators and reduction targets.[11] | Only mandates disclosure of “material”[12] Scope 1 and 2 emissions for Accelerated and Large Accelerated Filers. Non-AFs and Small Reporting Companies (“SRC”) are exempted.[13] |
| 4 | Granularity of Disclosure | Provides company-level disclosures without distinguishing between products or financial instruments. | Requires detailed, product-specific disclosures, including categorization based on sustainability impact.[14] | Limited to general climate-related financial risk disclosures and lacks the granularity for individual products or offerings. |
| 5 | Disclosure Objective | Takes a universal, impact-driven approach treating ESG as a societal responsibility and focusing on long-term sustainability. | Aims to improve the transparency of financial products and guide sustainable investment decisions across the EU market. | Follows a materiality-based standard aimed at informing investors about financially significant climate-related risks. |
5. Gaps in the BRSR Framework
5.1 Despite BRSR’s progressive intent, implementation challenges persist. A key challenge is its inability to combat “Greenwashing”.[15] Principle 2 of the BRSR, requires companies to provide goods and services “sustainably” and “safely”.However, theabsence of clear objectives for achieving this (for e.g., reporting net-zero carbon emission targets or quantifiable plastic reduction targets) allows companies to report superficially and mislead stakeholders. This can be observed in the claims made by several automobile manufacturers of using recycled input material despite no data being produced on reused or recycled plastic. Their claims came under scrutiny when the issue was highlighted by SEBI citing concerns over the validity of claims by corporates in their ESG disclosures. In the absence of standardised benchmarks and third-party verifications, such claims often go unchallenged, undermining the credibility of the framework. While BRSR Core now mandates assurance for certain KPIs, most product-specific environmental claims still fall outside its scope, leaving ample room for greenwashing.
Moreover, while Value Chain Disclosures have replaced “assurance” with “assessment or assurance” to potentially reduce greenwashing by requiring third-party reviews, it remains unclear whether these assessments improve reporting accuracy or simply add another layer of compliance. There is also a need to develop standards that align with global benchmarks, such as the International Standard for Sustainability Assurance.
5.2 Certain structural challenges also persist. For example, the emissions reported are not specific. While companies are required to disclose Scope 1 and Scope 2 emissions as mentioned under principle 6, they are not mandatorily required to provide details on emissions of constituent gases. This omission risks data distortion and compromises disclosure reliability. For example, there is widespread speculation of underreporting of methane emissions by the oil and gas sector. This becomes problematic as methane is significantly more potent than carbon dioxide in trapping heat within the atmosphere. Without gas-specific data, the disclosures fall short of enabling real-world environmental risk assessments and investor decision-making.
5.3 BRSR’s sector-agnostic scope also limits its impact as the framework provides no sector-specific disclosure requirements. For instance, while principle 6 requires reporting on sustainable resource usage, it does not account for the difference in business models. While certain sector-specific guidelines, such as those issued by the National Stock Exchange (“NSE”) and the Stakeholder Empowerment Services (“SES”)[16], are available, these are advisory and non-binding in nature. This lack of granularity allows high-impact sectors to evade scrutiny and also allows them to misrepresent data to stakeholders.
5.4 Finally, BRSR’s disclosure process is static, and requires annual reporting alongside financial statements. There is no technological innovation or development of mechanisms for real-time or flexible data analysis. In contrast, the SEC Rules mandate climate-related disclosures in XBRL format, which allows information to be both human and machine-readable.[17] This enables automated data extraction, large-scale comparison, filtering, and analysis across sectors. The absence of such digital tagging and dynamic reporting tools in BRSR limits its utility for ongoing monitoring, investor analysis, and timely regulatory intervention.
6. Conclusion
SEBI’s release of the BRSR framework in 2021 was a long-overdue step toward aligning Indian corporate disclosures with global ESG standards. By mandating standardised ESG reporting for the top 1,000 listed companies, BRSR has enhanced transparency and accountability. However, in its current form, the framework is limited in its ability to drive real change or improve sustainability outcomes. There are no penalties for failing to meet climate or social goals, nor are there mechanisms to verify the accuracy or sincerity of reported data.
To prevent such subversion, BRSR must incorporate enforcement mechanisms, such as mandatory third-party audits, penalties for misreporting or non-disclosure, and clear consequences for failing to meet declared ESG commitments. Additionally, SEBI could consider phased expansion of reporting requirements, dynamic, real-time disclosures through digital formats, and sector-specific benchmarks to ensure that disclosures are both comparable and meaningful. Without these structural reinforcements, BRSR risks becoming a compliance formality rather than a catalyst for corporate sustainability transformation.
[1] The top 1000 companies are determined through market capitalization
[2] NGRBC comprises nine thematic pillars of business responsibility which include: 1 – Businesses should conduct and govern themselves with integrity, and in a manner that is Ethical, Transparent and Accountable, 2 – Businesses should provide goods and services in a manner that is sustainable and safe, 3 – Businesses should respect and promote the wellbeing of all employees, including those in their value chains, 4 – Businesses should respect the interests of and be responsive to all their stakeholders, 5 – Businesses should respect and promote human rights, 6 – Businesses should respect and make efforts to protect and restore the environment, 7 – Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent, 8 – Businesses should promote inclusive growth and equitable development, 9 – Businesses should engage with and provide value to their consumers in a responsible manner
[3] Scope 1 covers emissions from sources that an organisation owns or controls directly
[4] Scope 2 covers that a company causes indirectly and come from where the energy it purchases and uses is produced
[5] Scope 3 covers emissions that are not produced by the company itself and are not the result of activities from assets owned or controlled by them, but by those that it’s indirectly responsible for up and down its value chain. It includes all sources not within the Scope 1 and 2 boundaries
[6] SDGs were adopted by the United Nations in 2015 as a universal call to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity
[7] GRI Standards are a modular system of interconnected standards. They allow organizations to publicly report the impacts of their activities in a structured way that is transparent to stakeholders and other interested parties
[8] While these rules have been formally released by the SEC, they are yet to come in force due to pending litigation
[9] AFs are companies with a public float of USD 75 million and USD 700 million and have been subject to SEC reporting requirements for at least 12 months. LAFs are companies with a public float of USD 700 million or more as of the last business day of its most recently completed second fiscal quarter
[10] Financial Products under SFDR includes a product or service offered by a financial market participant, encompassing investment funds, pension products, and insurance-based investment products
[11] PAI is any impact of investment decisions or advice that results in a negative effect on sustainability factors, such as environmental, social and employee concerns, respect for human rights, anti-corruption and, anti-bribery matters
[12] Information is considered to be material if there is a likelihood that it would be considered important by a reasonable investor when determining whether to buy or sell securities, or such a reasonable investor would view the omission of the disclosure as having significantly altered the total mix of information made available
[13] An SRC is an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not an SRC and that: (1) had a public float of less than USD 250 million; or (2) had annual revenues of less than USD 100 million and either: (i) no public float; or (ii) a public float of less than USD 700 million
[14] Article 6 Products – All products, Article 8 Products – Light Green products, Article 9 Products – Dark Green Products
[15] Greenwashing is the act of making false or misleading statements about the environmental benefits of a product or practice
[16] SES is a Corporate Governance research and advisory firm. It is the first Company to register as Proxy Advisor under SEBI (Research Analysts) Regulations, 2014
[17] eXtensible Business Reporting Language is a software standard that was developed to improve the way in which financial data is communicated, making it easier to compile and share this data. It is an implementation of XML, which is a specification that is used for organizing and defining data online