Indian Sustainability / ESG Landscape

The Power of ESG Reporting: An Indian Perspective

As India enters its third year of mandatory Business Responsibility and Sustainability Reporting (BRSR), the transformative potential of Environmental, Social, and Governance (ESG) reporting becomes increasingly evident. Companies are not only adapting to regulatory mandates but are also discovering the inherent value of embedding ESG principles into their operations. For ESG consultants, this evolution represents both a challenge and an opportunity to shape the future of sustainable business practices in India.

The Regulatory Push: BRSR as a Catalyst

With SEBI mandating BRSR for the top 1,000 listed companies by market capitalization since FY 2022-23, ESG reporting in India has transitioned from being a voluntary initiative to a compliance requirement. This shift underscores the government’s commitment to aligning corporate practices with global sustainability frameworks. The BRSR framework not only requires disclosures on material ESG risks and opportunities but also emphasizes value chain accountability, pushing companies to report on 75% of their upstream and downstream transactions with value chain partners starting FY 2024-25 on a voluntary basis. This has elevated ESG reporting from a compliance exercise to a strategic imperative.

Unlocking the Power of ESG Reporting

1. Building Investor Confidence – In an era where sustainable investing is gaining traction, ESG reporting has become a critical factor for attracting responsible investors. Companies with robust ESG practices are better positioned to access capital, including green bonds and sustainability-linked loans. This is particularly significant in India, where ESG funds have seen substantial growth, reflecting investors’ confidence in companies that prioritize long-term sustainability.
2. Enhancing Business Resilience – ESG reporting helps companies identify and mitigate risks related to climate change, regulatory changes, and social inequities. By addressing these risks proactively, businesses can ensure operational continuity and resilience. For instance, companies adopting renewable energy solutions or implementing circular economy practices are better equipped to navigate resource scarcity and regulatory shifts.
3. Driving Innovation and Competitiveness – ESG compliance often necessitates adopting innovative solutions, whether iin terms of energy-efficient technologies, waste reduction strategies, or digital tools for monitoring ESG metrics. These innovations not only improve sustainability performance but also enhance operational efficiency and competitiveness in global markets. Indian exporters, in particular, benefit from aligning with international ESG standards, securing their place in global supply chains.
4. Strengthening Stakeholder Relationships – Transparent ESG reporting fosters trust among stakeholders, including customers, employees, and communities. Consumers increasingly prefer brands that demonstrate environmental and social responsibility, while employees value companies that prioritize diversity, equity, and inclusion. ESG reporting serves as a powerful tool to communicate these commitments, strengthening stakeholder relationships and brand loyalty.
5. Aligning with National and Global Goals – India’s commitment to achieving net-zero emissions by 2070 and its focus on the UN Sustainable Development Goals (SDGs) underscores the importance of ESG practices. Companies that align their ESG strategies with these goals not only contribute to national development but also position themselves as global sustainability leaders.
6. Value Chain Accountability – With the extended reporting requirements under BRSR, companies are now accountable for the ESG impacts of their value chain partners. This has led to increased collaboration and capacity-building initiatives to ensure compliance across the supply chain. For ESG consultants, this presents an opportunity to assist businesses in navigating complex value chain dynamics and achieving comprehensive ESG compliance.

ESG Reporting: A Strategic Imperative for Businesses

For Indian businesses, ESG reporting is no longer just about meeting regulatory requirements; it’s about driving long-term value creation. Companies that integrate ESG principles into their core strategy can unlock multiple benefits, including improved financial performance, enhanced reputation, and access to new markets. Moreover, as global investors and partners increasingly prioritize ESG performance, companies with strong ESG credentials gain a competitive edge.

The Role of ESG Consultants

As consultants, we play a pivotal role in guiding companies through their ESG journey. From identifying material ESG risks and opportunities to developing robust reporting mechanisms, our expertise helps businesses navigate the complexities of ESG compliance and create impactful strategies. By leveraging tools like data analytics, stakeholder engagement, and capacity-building programs, we empower companies to go beyond compliance and embrace ESG as a driver of innovation and growth.