Top firms face hurdles as a result of SEBI’s new ESG reporting standards

Top Indian companies are struggling to compile ESG-related data as mandated by SEBI. The non-financial data is scattered across various internal systems thus its aggregation and compilation pose a challenge.  The companies also need to assess the impact of disclosing private data on sensitive governance issues. Proposed rules also expect the top companies to report ESG data pertaining to their suppliers, vendors, and other members in the value chain. This is another daunting task as the firms begin dealing with the complexity of capturing and auditing data from thousands of entities.

The top 150 firms will undergo the initial ESG audit process in FY23–24, followed by the top 250 listed companies in FY 24–25, the top 500 in FY 25–26, and the top 1000 in FY 26–27, according to the Ministry of Corporate Affairs and SEBI. Top listed Companies have contacted consultants in recent days to find information gaps in their ESG processes and come up with practical solutions that will meet regulator criteria and guarantee compliance. Data collection presents difficulties, according to experts, particularly for Companies with operations across different countries, each with its own disclosure requirements and rules.

To strengthen the reporting of ESG performance for listed Companies by incorporating audits and value chain disclosures, the Securities and Exchange Board of India (SEBI) issued a circular on July 12, 2023. According to the new regulations, SEBI mandates that the top 1000 listed entities (by market capitalisation) to which BRSR reporting applies obtain “reasonable assurances” on each of the nine indicators of BRSR Core.