SEBI proposes to make ESG disclosures easier for listed companies

The Securities and Exchange Board of India (SEBI), the market regulator, has recommended steps to facilitate Environmental, Social, and Governance (ESG) disclosures by listed firms and their value chain partners.

The market regulator is seeking to enforce disclosures on ESG measures for only those companies with value chain partners that individually contribute 2 percent or more of the company’s purchase or sales by value.

In addition, SEBI has suggested that, for the first year, value chain partners’ disclosures be optional rather than required to comply with or provide an explanation for.

Previously, the top 250 listed companies were mandated to disclose ESG metrics for value chain partners in annual reports from the financial year 2024–25, covering partners accounting for 75% of purchases or sales. The new proposal aims to simplify this compliance.

These disclosures align with the Business Responsibility and Sustainability Reporting (BRSR) Core, which mandates ESG reporting on key indicators with a focus on data verifiability. Currently, BRSR is required for the top 1000 listed companies.

Sebi also suggests changing ESG data ‘assurance’ to ‘assessment’ to reduce compliance costs and challenges. This responds to concerns about the burden on smaller suppliers.

Additionally, SEBI proposes incorporating green credits as a leadership indicator in BRSR, rewarding companies for environmentally sustainable activities. In February, the Ministry of Environment, Forest and Climate Change (MoEFCC) outlined the methodology for calculating green credits for tree plantations.