ESG in India: A Holistic Approach for Global Comparability in Sustainability Reporting

ESG reporting standards in India are rapidly evolving as corporations and regulatory bodies recognize the importance of sustainability in aligning with global norms. Companies are navigating a complex landscape involving multiple ESG rating agencies, reporting standards, and data providers, each with unique methodologies and metrics. This variability can make it challenging for investors and stakeholders to assess ESG performance accurately.?

To foster comparability, ESG reporting in India has seen regulatory advancements, including the Securities and Exchange Board of India (SEBI)’s initiatives. With frameworks like the Business Responsibility and Sustainability Report (BRSR), SEBI is urging Indian companies to adopt global standards and establish a sustainable business ecosystem.? ?

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The Growing Importance of ESG in India?

ESG considerations are no longer peripheral but are fast becoming central to business strategies in India. A study by Capital Group revealed that 89% of investors globally incorporate ESG factors into their investment decisions, reflecting an increasing demand for responsible corporate conduct. Indian companies are increasingly realizing that embracing sustainability, ethical governance, and social responsibility helps them build long-term relationships with investors, stakeholders, and customers, all of whom are more ESG-conscious than ever before.?

SEBI's initiatives reflect the demand for globally comparable standards. Since introducing the Business Responsibility Report (BRR) in 2012, SEBI has paved the way for India's companies to meet global ESG standards. The transition to Business Responsibility and Sustainability Reporting (BRSR) marks a significant stride toward enhanced transparency, urging listed companies to provide detailed ESG disclosures.?

BRSR Core: A Step Toward Market-Relevant Reporting?

A noteworthy addition to India’s ESG reporting landscape is BRSR Core, which adapts ESG standards to reflect emerging market realities. This framework encompasses 49 key performance indicators (KPIs), including metrics specific to India, such as employment generation in smaller towns and women’s wages, promoting transparency and fostering comparability across companies.?

BRSR Core’s holistic approach, coupled with the increasing ESG awareness among stakeholders, is making ESG performance a critical determinant for a company’s growth trajectory and its ability to attract capital.?

Making ESG Performance Comparable?

To achieve global comparability, ESG performance assessment must consider a wide range of indicators, covering areas such as labor policies, energy use, waste management, and diversity and inclusion. This approach gives investors a comprehensive understanding of a company’s impact across environmental, social, and governance dimensions.?

Demand for transparency and accountability is growing. Investors are increasingly integrating ESG considerations into their strategies as they recognize the correlation between ESG performance and financial success. Consumers, too, prefer brands that demonstrate a commitment to sustainable practices and social responsibility.?

In response, regulators worldwide are implementing frameworks to incentivize sustainable practices. An example in India is the Green Credit Program proposed by SEBI, which allows companies to earn credits for initiatives like tree plantation on degraded lands, as recognized by the Forest Department.?

Challenges of Inconsistent ESG Measurement?

Despite the progress, inconsistencies in ESG measurement remain a challenge. Multiple agencies and standards lead to varied methodologies, making it difficult to draw meaningful comparisons. Authenticity of ESG data is also a concern; a large proportion of ESG reporting in India is self-reported, and is largely backward-looking, focusing on past performance. The inclusion of forward-looking data is essential to capture potential risks and opportunities, thus providing a more accurate picture.?

Driving Standardization in ESG Reporting?

Standardized ESG metrics are vital for corporations to meet stakeholder expectations and enhance comparability. SEBI’s BRSR framework is a promising move toward a unified approach, with certification provided to ESG rating providers to further reinforce credibility. However, for companies, BRSR compliance is more than a regulatory formality—it’s an integral part of their sustainability journey.?

Accurate data collection, verification, and interoperability across ESG frameworks are crucial in this process. Collaborating with specialized technology service providers ensures data precision and minimizes redundancies, helping corporations effectively navigate the complexities of ESG compliance.?

Conclusion: The Way Forward for ESG in India?

With initiatives like BRSR and BRSR Core, ESG in India is moving toward greater transparency and comparability on the global stage. As Indian companies align with these standards, they contribute to a sustainable and equitable business landscape.?

To explore how Ecodrisil can enhance your ESG reporting efforts, consider the impact of our ESG Xpress platform. This solution streamlines ESG reporting by automating data processing, aligning with BRSR and GRI, and ensuring data accuracy. By simplifying ESG compliance, Ecodrisil empowers companies in India to meet growing stakeholder demands and position themselves as leaders in sustainability.??

This blog was originally published on the Ecodrisil website: https://ecodrisil.com/esg-in-india-a-holistic-approach-for-global-comparability-in-sustainability-reporting/